Dubai: The six months to June 2023 have been nothing short of spectacular for the UAE banking sector. Higher interest rates delivered robust profit margins, while the appetite for loans and other services among businesses and retail clients grew just as strongly. The higher cost of debt did not have any impact on numbers, with loan offtake during June offering more evidence of that.
This particular demand boost lifted the fortunes of all banks, with National Bank of Fujairah stepping up with a Dh332.1 million net profit for H1-2023, a marked improvement from the Dh150.5 million a year ago. NBF played to its strengths, those being in the corporate banking and trade finance categories.
Vince Cook, CEO of National Bank of Fujairah, talks about how the entity plans to continue in the same vein. And staying ahead of all the digital transformation that’s coursing through the banking sector.
NBF has extensive bullion operations - have the current gold price levels and extensive institutional investor demand helped in the H1 numbers?
NBF caters to the gold and jewellery sector in the country through its precious metals segment, a specialization within the corporate banking vertical. Whilst the gold price remains relatively high - in response to the volatility seen in various global and macroeconomic factors - the performance of the gold and jewellery sector in the UAE has remained stable. Both on the retail and wholesale fronts, throughout H1-2023, which reflects positively in the numbers.
Do you reckon it would make sense for you to launch gold loan schemes? Given the bank track record in the bullion space, would it make sense for you to join?
The gold loan scheme is offered to individual retail customers, with the loan secured against gold or gold jewellery kept as collateral by the bank.
NBF’s focus in this sector is more in the corporate sector, where we are a significant lender of gold to customers. This is a niche product for this particular segment, where gold is a major requirement in terms of working capital.
Indeed, NBF has been offering gold loans since 2002.
Your core strengths have been in the B2B space, with trade financing being a key part. Any plans to change the mix around by tapping more from retail?
Our traditional strengths are in the B2B space, however, NBF has been developing and growing its retail business successfully, and this will continue to be an important element. Our offering in residential mortgages and our for priority plus retail customers continue to develop.
Would it make sense to recast NBF as a nimble digital bank? Even an all-digital one? Given how scale and size will matter in any future banking sector?
We have been making significant investments in the digital space, both in customer-facing initiatives, as well as in enhancing our back-end processes. Particular areas of focus have been the digitalisation of SME banking through our NBF Connect product suite, as well as improving the digital onboarding of new corporate, business, and retail customers.
The bank’s strength in trade finance is being augmented by digitalising various processes and leveraging artificial intelligence to enhance customer experience and execution speed. In addition, we now have one of the most regarded digital trading platforms in NBFX.
NBF’s strategy is to transition to be a digitally-enabled bank to bring the speed, convenience and functionality that digital technology enables into the hands of our customers. While retaining the ability for our customers to speak to someone when they want to.
Some of your banking industry peers have raised additional capital. Do you plan to do so?
The bank’s capital adequacy ratios remain robust and strong relative to its peers, and the boasts strong long-term shareholders who are both capable and willing to invest in the further development of the bank.
This can be seen by the level of bonus shares and retained earnings that the bank has accumulated. The bank’s Additional Tier 1 capital notes of $350 million has a call date in Q4-2024, the refinancing for which is under discussion.
Overall levels will continue to be assessed against the growth opportunities that we see.
Any category that you intend to get into more aggressively in H2 and going forward?
In H2-2023, and moving forward, NBF is looking to expand its focus in areas of transactional banking, business banking, and its digital offerings. Key projects include a customer-enabled digital trade finance platform, which will further strengthen NBF’s positioning as a differentiated trade finance bank in the UAE.
Our SME platform solution - NBF Connect - is being enhanced and will provide a fast and completely virtual way of adding new business accounts. The enhanced version will be launched this year and will support account opening for all business segments in an efficient, simplified, and paperless way.
We will be launching an exclusive app for retail customers, which will act as a one-stop solution for all retail banking requirements, and NBF Markets, a digital service that will allow customers to execute trades in a wider range of FX, bonds, commodities, equities, and ETFs on a real-time basis.