Dubai: Emirates NBD said its lending to small- and medium-sized companies has grown 30 per cent this year and it plans to double that business over the next three years.
The Dubai government-controlled lender is boosting loans to small companies in the tourism, logistics, transportation, trading, food and beverage and services industries as economic growth rebounds in the second-biggest Arab economy, Vikas Thapar, Emirates NBD's general manager for consumer finance and head of business banking, said.
"Dubai historically has been a haven for small and medium enterprises," Thapar said. "SMEs were never over-leveraged, so they never had that kind of a negative impact from the crisis. Their cost structures are low and decision-making is fast."
Economic growth in Dubai may accelerate to 3.5 to four per cent this year from 2.8 per cent in 2010, according to Citigroup Inc.
Emirates NBD, which reported a two per cent decline in lending in the first half, expects its loan book to expand by one to two per cent over 2011, the CEO, Rick Pudner, said in July. Overall lending by UAE banks increased by two per cent in the eight months through August.
Emirates NBD has doubled the number of its small- and medium-sized business customers in the past three years to 50,000, and offers them loans ranging from Dh100,000 to Dh50 million, Thapar said.
The interest margin, a measure of profitability, from the SME business exceeds that of the bank as a whole because of much lower loan-loss charges, he said.
Lending to small- and medium-sized companies makes up four per cent of overall industry loans, Thapar said, citing a World Bank investment study.
