Abu Dhabi: The Abu Dhabi Islamic Bank (ADIB), one of the leading Islamic banks in the UAE wants to gain a significant market share of Islamic banking and financial services to expatriates and non-Muslim customers while remaining loyal to the core UAE National customer base, said Philip King, Head of Retail Banking in an interview.
King said there has been a significant increase in the number of expatriate customer, both Muslims and non-Muslims in the last few years.
“Our non-Muslim customer base is rapidly expanding. It used to be 80 per cent UAE nationals and 20 per cent expatriates. The new trend we see is that the flow of new business is about 60 per cent nationals and 40 per cent expatriates with a significant share of that business coming from non-Muslim expatriates.,” he said.
As part of ADIB’s efforts to reach out to more expatriate customers, the bank is planning to expand its distribution channels in Dubai and Northern Emirates. “We see the growth momentum picking up in Dubai with strong employment generation and population growth. As we get closer to Expo 2020, business opportunities in retail banking is going to increase and clearly we want a share in it,” said King
ADIB Group reported a 20.7 per cent increase in net profit to Dh1.45 billion as total assets grew 19.8 per cent. The record financial performance was significantly supported by retail customer financing that grew more than 20 per cent while deposits grew 23.2 per cent last year.
“The financial crisis did not adversely impact us in terms of slowdown in asset growth and deleveraging. We used our relative advantage to build a strong UAE national customer base and a strong brand with brand presence in Abu Dhabi and across the country. While a few years ago our core market, in terms of market presence was Abu Dhabi, in the last couple of years we have emerged the largest Abu Dhabi based bank in Dubai,” King said.
Going forward, the bank is expecting the same kind of growth in Dubai, if not better. There are a couple of new businesses it launched recently that are helping it to keep us pace with that rapid rate of growth. “Two to three years ago, we started looking again at the SME [small and medium enterprises] business. Business banking has been a new product area that we have ventured into. Last two years we have witnessed exceptional growth in that area, but clearly that is not the largest asset block in our total financing portfolio. But certainly that business is helping us.
While gaining market share is a priority, the bank is sharply focused on managing its asset quality. Total retail banking non per forming loans (NPL) was less than one per cent of the total assets. NPL ratios have been very stable for ADIB for the past several years and we want it to be that way in the future. “Currently we a strong portfolio of salary transfer accounts from the UAE nationals and we are in the process of complementing it with a strong such account base from our expatriate customers,” said King.
The focus on reducing the cost of funds continued with total deposits increasing significantly last year. ADIB’s deposit growth rate last year has been in excess of 20 per cent with attractive cost of funds reflecting on our profit margins. Current and savings account (CASA) remains a strong component in the bank’s funding base. “That has been one of the key contributors in our funding mix. Our priority banking business is an excellent source of CASA deposits. The deposits from our high end customer are very strong, stable and are long term in nature,” King said.