United Arab Bank CEO: No Hike In Mortgage Lending Despite Dubai Property Market Boom

The market has matured to a level capacity although rents continue to increase, says CEO

UAE lender, United Arab Bank (UAB) has announced that it will not be increasing its mortgage lending despite upward movement in Dubai’s property market.

“I don’t see our mortgage book rising significantly, and we currently have no intention of taking more risk,” Paul Trowbridge, CEO of UAB told Gulf Business.

The market has matured to a level capacity although rents continue to increase. “What we have seen is that there has been an undoubted plateauing of the property market since the announcement of the Expo,” he said.

He also stressed that banks should not open their credit lines, because “there are a lot of valuable lessons to be learned from what happened in 2005 to 2008, in the UAE and globally and there are many lessons to be learned in the aftermath of 2008.”

The global financial crisis caused Dubai’s property market to crash in 2009, with property prices falling by 60 per cent. Frenzied investors quickly sold their properties, and billions of dirhams worth of real estate projects in the emirate were cancelled or halted.

“It’s up to the banks and other financial institutions to make sure that they and their customers are informed of what’s prudent in terms of lending, as they have a social obligation,” Trowbridge said.

However, the CEO stressed that the bank would look to increase overall lending through the opening of new branches. With 27 branches in the UAE currently, and another three being built, the UAE lender saw a 34 per cent increase in net profit in Q1 2014, and a 45 per cent rise in total income.

The lender is also planning to boost Islamic finance operations. UAB has had an Islamic window for four years and they are beginning to see some traction from it, he said.

“we increased our footprint in Islamic banking, and we want to further increase our presence in this sector.

“Islamic banking has a niche in the region, for obvious reasons. So, we want to be there. We are not an Islamic bank but we would certainly like to offer our customers the option,” added Trowbridge.