Abu Dhabi: National Bank of Abu Dhabi’s (NBAD) strategy to balance its income streams has been gaining traction and the results are visible in the bank’s performance, Alex Thursby, Group Chief Executive of NBAD told Gulf News in an interview.
In the second year into its transformational strategy, the bank has already started changing its business model with a focus on balancing its income streams from different segments of business.
“I think, it is how you make the money rather than making the money per se is important, and I think our strategy of moving towards a more balanced set of revenue streams across retail, commercial and whole sale has seen our business growing,” said Thursby.
NBAD reported a net profit of Dh5.57 billion in 2014, up 18 per cent compared to the previous year. For the fourth quarter of the year, the bank’s net profit was up 28 per cent year on year at Dh1.37 billion, beating analyst forecasts. The bank’s growth last year was driven primarily by strong fee income growth across all lines of business, solid loan growth, increases in deposits and CASA [current and savings accounts] as a per cent of deposits and solid gains in the investment portfolio.
The transformational strategy is based on three key pillars such as Retail & Commercial Banking, Global Wholesale Banking and selective international expansion. The bank has begun working on the first to pillars, while the third will be taken up when the opportunities are right.
In the retail and commercial segment the bank last year made significant investments in refurbishing its branch network, e-banking and mobile banking platforms. For the full-year 2014, the retail and commercial revenues were up 8 per cent and net profits were up 11 per cent.
The bank expects bulk of its balance sheet growth this year to come from retail and commercial businesses, and to some extent private banking and wealth business.
Diversifying income streams
The Global Wholesale Banking and Wealth business, which forms the pillar II of the strategy, Thursby said, is making significant progress towards the bank’s target of diversifying income streams while supporting its core UAE customer base. “In this segment too, our focus is servicing our UAE customers internationally. Giving our customers an opportunity to deal with us outside the UAE, has worked very well,” he said.
The wholesale business of NBAD is based on what the bank calls the “originate to distribute” model. “I don’t see our loan book climbing aggressively in the wholesale segment. But I see our wholesale business continuing to originate deals and then sell them to investors,” said Thursby. “We’ll do lots of bond deals and lots of syndications. I expect — maybe up to 50 bonds to be lead managed by NBAD this year.”
In 2014, the Global Wholesale Banking division took the lead in driving a number of landmark transactions, such as the Emaar Malls IPO, first-ever sukuk for non-Islamic sovereigns such as the UK and Hong Kong. For the full-year 2014, this segment’s revenues were up 9 per cent and net profits were up 18 per cent.
Global Wealth had another strong year in 2014, generating double digit growth in assets under management (AUM), while year-over-year revenue grew 61 per cent and the net profit was up 89 per cent.
“Our non-funded strategy around wealth management products, around rates and forex (FX) and certain forms of trade finance, trade services, has done very well,” said Thursby.
Going forward, Thursby said the bank will continue to strengthen its retail offerings in the UAE and commercial offerings around international needs of customers while offering a global network proposition to its customers.
“Our UK and Hong Kong customers can use us in the UAE. Conversely, our UAE customers can use us in the UK or more importantly, across the west-east corridor.”
