Due to its conservative approach to risk management and strict cost control, United Arab Bank (UAB) believes the UAE banking sector has a bright future and is confident in maintaining good profit growth this year.
Shirish Bhide, chief executive officer of UAB, attributed the bank’s customer-centric strategy following significant management changes and the UAE government’s efforts to contain the Covid-19 pandemic. He also cited the Central Bank’s targeted economic support scheme (TESS) to increase liquidity in the banking sector.
“Due to their proactive measures to stabilise the economy, the UAE is the finest country in the world at handling the epidemic. In addition to ensuring macroeconomic stability in the banking sector, the central bank’s TESS initiative, which concluded in June of this year, benefited clients and their companies, according to Shirish in an interview.
The Covid19 epidemic sent the global economy into its greatest recession since the Great Depression, and the UAE responded by introducing a Dh388 billion economic stimulus programme. Included in these stimulus programmes is Dh50 billion for the TESS initiative, which will increase liquidity in the banking and financial sector.
“Most banks in the UAE were able to benefit from the government’s encouraging actions since a lot of previously suppressed demand that had been buried for at least two years began to surface. According to Shirish, it benefited the travel and hotel industries as well as the airline and entertainment industries.
“As a result, UAB was also able to benefit from the economy’s slow opening up and begin helping its clients wherever it could. Evidently, the demand for loans has increased since the beginning of the year.
As a result, we were able to deploy certain loans that were in the pipeline and other loans, and we have already had some success in that regard, which is continuing to drive growth in the second quarter. We anticipate that tendency to continue to the bank’s advantage and improve its financial standing,” he added.
The chief executive of UAB responded to a query concerning loan growth by stating that demand for loans in the private sector will be driven by government expenditure.
“Government expenditure in the UAE drives the need for borrowing. As a result of increasing oil prices, we anticipate that government spending will increase. The business sector will gain from this government investment in the economy, he added.
In regards to funding for startups and small and medium-sized businesses, he stated that UAB is open to all prospects in the UAE.
“We aim to bank all of the UAE’s bankable clientele. We are open to all sectors, whether they are in retail, SME, or wholesale, he stated.
“Our risk tolerance, as well as clearly our own internal return on capital barriers and strategic strategy, determine how much we undertake in each category. But we’ll keep our eyes open for any chances that come up in the market, he continued.
UAB increased first-half net profits by 209% year over year in 2022 as a result of strengthening its core business, streamlining its cost structure, and maintaining important banking fundamentals. Following top-level management changes, the bank reduced provisions by 52% in the first half, which opened the door for significant profit growth.
Shirish is a seasoned professional with more than 30 years of corporate banking, credit risk, and risk management expertise. His hiring as CEO comes as the bank works to implement its digital transformation plan, look at new avenues for business expansion, and maximize shareholder value.
Shirish is eager to quicken the bank’s plan for digital transformation, which promises to improve customer experience, reduce transaction costs, and considerably advance banking activities in the UAE.
Use of technology is unavoidable. Every product plan, no matter how big or little, should take technology into account.
Therefore, Shirish remarked, “We will continue to strategically invest, invest in suitable technologies for customer comfort and improve the efficiency of the present process.
The UAB president stated that the introduction of technology may enhance the danger of cybersecurity in response to an inquiry about it.
“We stay up to date with the most recent developments in cybersecurity, and we always need to be one step ahead,” he added.
According to Shirish, UAB will keep expanding its workforce if necessary to adhere to the bank’s aim of increasing shareholder value.
“The bank will constantly seek to use more and more extra resources wherever we find prospects for variable revenue. Therefore, we will continue to look for opportunities to employ the best people who can advance our firm, he stated.
According to Shirish, the outlook for the banking industry in the UAE is positive since the government is taking several steps to maintain economic development in the years to come.
“To make the UAE one of the most desirable locations for financial capital and human resources, the government has implemented business and immigration changes. Additionally, it intends to increase funding for fostering manufacturing in the nation and supporting new sectors. We’re talking about significant amounts of capital spending, which is fantastic news for the bank. I’m thus really hopeful,” he remarked.
In response to a query regarding the difficulties UAB faces, he identified competitiveness as the main issue.
The main difficulties we confront, he continued, “for any bank, I think are global and regional disruptions and competitive threats.”
According to Shirish, interest rates are anticipated to maintain their upward trajectory in the upcoming months, increasing company costs in accordance with global markets.
“Higher interest rates will raise the cost of borrowing and may have a negative impact on some industries and consumer spending,” he said, adding that the main goal of raising interest rates is to contain inflation.
“I believe that controlling inflation is crucial. Interest rates will drop once inflation is under control, expenditure will gradually increase, and economies will resume their growth trajectory. In order to achieve the proper type of equilibrium for growth, all prices must remain in a kind of sweet spot that is neither too low nor too high.