It would seem logical that a bank’s profits and financial results run parallel with its commercial activity in a given region. But that’s not been the case with United Arab Bank (UAB).
The Sharjah-based lender has not opened a new branch in Dubai – the UAE’s financial hub – for almost 14 years and yet, it reported a rise in net profit of 24 per cent for 2012 with net income up 31 per cent.
Paul Trowbridge, chief executive officer at UAB, explained to Gulf Business how the bank has continued to punch above its weight.
“There are 53 banks in the UAE. For many years we were the smallest in terms of balance sheet,” says Trowbridge.
“We’ve always been a very profitable bank because we’ve done a large amount of trade finance which typically tends to be very efficient utilisation [of the balance sheet].”
The bank’s results back up its CEO’s words. Last year UAB reported net profit of Dhs410 million – it’s highest to date – and a net income of Dhs567 million.
“We’ve always batted well above our average in terms of profitability, but in the last four years we’ve dramatically shifted the business.”
By ‘shifting the business’, Trowbridge means growth. In the last four years UAB has doubled its number of branches to 20, mainly in Sharjah and the northern emirates. But it still hasn’t opened a new outlet in Dubai for over a decade, resulting in a host of missed opportunities.
“We haven’t opened a branch in Dubai for fifteen years, so we’ve missed out on Dubai Marina, Emirates Hills, The Ranches, The Palm. All of that is completely gone now,” the CEO admits.
But that’s about to change; Trowbridge reveals the bank’s plans to open another 10 new branches this year, half of them in Dubai, even if the trendy modern hotspots are all taken.
“Two thirds of the business is built upon commerce, so we will be opening in residential areas. But just because there’s population on the Palm or marina doesn’t mean you have to be there,” he says.
“Branches are a form of advertising. They’re also a point of convenience and a talking point of sorts; we’re talking about 10 points of reputation. That could be a kiosk, a full-scale branch or a significant regional office.”
UAB’s previous and continuing expansion isn’t relying soley on new branches though. Trowbridge explains there are differing options available in order to grow and continue the bank’s impressive financial results.
“We’ve started Islamic banking and retail operations. We’re not a government lender but in the last four years we have started lending to the emirates.
“It’s not a large part of the business but what’s important is we’ve taken the business into new paths of banking.”