SMEs high on the agenda of the UAE Banks Federation 2013 Business Plan (By IFN)

SMEs high on the agenda of the UAE Banks Federation 2013 Business Plan

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UAE: With up to 90% of companies in the UAE made up of SMEs, the UAE Banks Federation’s board of directors, during its recent meeting agreed to prioritize SME funding this year. The UAE government is expected to issue a law on SMEs by the end of 2013, with banks anticipated to lay down the foundations for funding such projects which constitute 88% to 90% of the UAE economy, Wadah Al Taha, the CFO and advisor at Zarouni Group said to a Gulf-based daily. Emirates Islamic Bank, one of the UAE’s most prominent Islamic banks with a paid up capital of AED2.43 billion (US$661.56 million) and a subsidiary of Emirates NBD, has also laid out plans to focus on the retail SME business; as stated by ENBD’s CEO, Rick Pudner, during a press conference last week. He said: “Retail SME is a key area of focus. The Islamic bank’s main aim is to expand our products and services in the retail segment and the SME market. We also have property and asset management companies which develop Islamic Shariah compliant products for investment purposes, but a key volume area would certainly be in the retail and SME segment,” he told Islamic Finance news. “We are seeing loan growth happen quite positively in the areas of retail, personal lending and trade finance amongst the UAE banks,” he added. Attractive valuations in the region are also expected to spur sentiment in the GCC retail banking sector, analysts say. At present, the main concern for SMEs in the region are high borrowing costs and exorbitant interest rates; beyond their capacity. “The loan rates are very, very high. We’re a micro company, so we don’t have tangible assets. There were no decent loan rates we could work with,” a CEO of a UAE-based design company said. Currently, it is said that only 4% of bank lending in UAE is allocated to the SME sector, while 86% of SMEs in the region have not sought bank finance, according to the Dubai SME Index launched by the Department of Economic Development.