Dubai: Emirates NBD PJSC, the United Arab Emirates' biggest bank by assets, will work on raising customer deposits by 10 per cent this year without sparking competition on higher interest rates, its chief financial officer said.
"We have chosen to keep our pricing in a reasonably competitive space without having to go out and compete at excessively high prices," Sanjay Uppal said in a phone interview yesterday.
UAE lenders have faced a shortage of liquidity due to the global credit crisis, which forced banks to offer higher interest rates to attract customer deposits. The gap between bank loans and deposits in the UAE widened to Dh47.1 billion in January from Dh35.1 billion in December, data posted on the central bank website shows. Emirates NBD's customer deposits rose in January after falling 1.4 per cent in the fourth quarter from the third.
"The focus on customer deposits is quite core to us," Uppal said. "We have seen some bidding up of deposit rates toward the end of December in the market and rather than compete with those rates, we chose to allow those deposits to go to other banks. ...Interestingly, as we went into January, we did see some of these deposits return," Uppal said.
Emirates NBD's customer deposits grew 11.6 per cent in 2009 to Dh181.2 billion while loans grew 2.7 per cent to Dh214.6 billion, according to its results. Loans are expected to rise by 5 per cent this year and "loan growth we believe will mostly be in the second half of this year", Uppal said.
Emirates NBD's net interest margin, the difference between the interest earned on loans and that paid on deposits, will also decline from the middle of this year, Uppal said
