Emirates Islamic Bank to reduce exposure to real estate (BY IFN)

Emirates Islamic Bank to reduce exposure to real estate

Daily Cover

UAE: Emirates Islamic Bank (EIB) has revealed a new and more aggressive expansion strategy for 2013 following its merger with Shariah compliant Dubai Bank. The bank, which intends to enhance its focus on retail banking, priority private banking, SMEs and mid-corporate business, is also looking to open 10 additional branches this year, bringing the total number of branches to 58. Faisal Aqil, deputy chief executive and head of consumer wealth management at EIB said that the bank is also looking to recruit between 70 to 80 junior staff in the coming months, with an eye on new graduates. Also part of the bank’s 2013 strategy is to lower its direct exposure to real estate, including mortgages, to less than 20% from a previous chunk of more than 40% during the financial crisis. The bank has also allocated 10% of its total assets for lending to SMEs, as it looks to capitalize on the growing number of small to medium businesses in the emirate, which is said to constitute 95% of the country’s economy. EIB is also looking to grow its retail banking business by 35% this year, mainly through personal financing and credit card schemes. According to reports, the bank’s financial statements show that it had AED13.1 billion (US$3.56 billion) in personal financing receivables as at the 31st March, accounting for more than 50% of its loan book, and representing 11.1% growth since January. According to Faisal, UAE-based banks were over-exposed to real estate during the wake of the financial crisis; encouraging the bank to reduce its current exposure moving forward. He also said that the government should consider imposing tax on investors who ‘flip’ their properties, or sell shortly after they have acquired a development. This is said to discourage any future mismatch between supply and demand in the property market.