Dubai: Noor Islamic Bank remains on track to break even by 2012 despite challenges in the banking sector due to Dubai World's financial woes and new worries over Dubai Holding, said Noor Islamic's chief executive Wednesday.
The company has no exposure to Dubai World and less than two per cent exposure to Dubai Holding, said Hussain Al Qemzi in an interview. Some analysts fear Dubai Holding could be the next Dubai entity to face a large scale restructuring.
"I think the issues around Dubai Holding are exaggerated," Al Qemzi said. "There is concern about any large group today, but Dubai Holding is a different situation [from Dubai World]."
But concerns over Dubai Holding's financial health have already weighed on Dubai Bank, another UAE-based Islamic bank.
Fitch Ratings downgraded Dubai Bank on Tuesday due to concerns over its profitability and rising losses as well as its exposure to Dubai Holding.
Dubai Bank is fully owned by Dubai Banking Group, a subsidiary of Dubai Holding.
Noor Islamic Bank is 25 per cent owned by Dubai Investment Group, the investments arm of Dubai Holding."Many banks are in similar situations, but as far as Noor goes, we enjoy larger capital and our result is positive," he said. "I think and hope it's not relevant to us."
But Al Qemzi said the company was opting to be prudent in its provisioning and plans for growth this year.
He said Noor Islamic Bank took between 2.5 per cent and four per cent of its assets in provisions last year and would likely do the same in 2010. The company currently has Dh2.5 billion in assets."In this market, it's healthy to take provisions," he said. "Our board is in favour of being extra conservative."
Despite a continued challenging environment, Al Qemzi said Noor Islamic Bank is still growing. He expects to open two new branches by the end of the year, bringing the total number of branches in the UAE to 20. He said the bank also hopes to double its customer base by the end of this year to around 84,000.
But plans to expand broadly outside of the UAE remain on hold, he said.
When Noor Islamic first launched in 2008, the bank said it aimed to be the world's largest Islamic bank within five years through acquisitions in countries such as Indonesia, Egypt and Britain.
But adverse global market conditions forced the company to rethink its strategy for the time being.
Opportunities
"We didn't change our plans ... we're still looking for opportunities," he said. "But we don't want to take any risk where money is scarce in the market."
Instead the company is continuing to focus on its corporate banking business, which he said was an area of strength.
The company recently closed a $255 million (Dh937.8 million) sukuk for Turkey's Bank Asya.
