Vince Cook, CEO of NBF Image Credit: Gulf News Archives

Dubai: National Bank of Fujairah (NBF) expects to maintain strong asset quality matrices this year supported by continuing improvement in cost of risk, Vince Cook, CEO of NBF told Gulf News in an interview.

The bank reported net impairment provisions of Dh436.8 million last year compared to Dh441.7 million in 2017 with the NPL ratio improving to 5.13 per cent from 5.53 per cent from the year-end 2017. While the UAE banking sector as whole witnessed nearly one per cent jump in cost of risk driven by a significant increase in loan loss provisions, NBF managed a 55 basis points drop in cost of risk.

While the bank remains comfortable on the outlook for asset quality, Cook expects to see some amount of pressure coming from the adoption of IFRS 9 [International Financial Reporting Standards] and classification of assets based on the new standards. He feels the market as a whole needs to adapt to tighter credit cycles and comply with the rules to avoid a spike in NPLs.

“The challenges with IFRS 9, especially the movement between a normal performing account and what they call stage 2, before it is considered non-performing, there is a big area of accounts that is not performing or not working according to plan. I think that area is causing concerns,” said Cook.

In IFRS 9 Stage 2 is where credit risk has increased significantly since initial recognition. When a financial asset transfers to stage 2 entities are required to recognise lifetime expected credit losses. Stage 3 is where the financial asset is credit impaired. Reclassification of accounts into stage 2 by banks comes with a stigma of potential trouble for the business.

“If the customer looks as though he started to have problems, and everyone is aware of it you almost create the problem that you are concerned with. It can create a chain reactions as everyone is concerned and no one will lend him money. Probably we are making things a lot harder instead of help support businesses,” he said

A reclassification into stage 2 can be triggered by very simple things. For example someone is due to pay on the contract and they take an extra week and that could trigger a downgrade from a normal performing accounts to a stage 2 case.

“There needs to be a change in the market practices. Customers need to be on top of things in meeting their commitments. In the past delays in payments were considered normal, but now such delays can result in real problems,” he said.


Digitising banking services is becoming a norm for the banking business across the world and NBF does not want to be left behind.

“People are clearly seeing the benefits of digitisation across the banking sector. I think the benefits come through a lot of products and services utilising the new technologies. We have done a lot of robotic process automation that brings convenience and cost savings,” said VinceCook, CEO of NBF.

The bank is working digitisation in corporate business too “We are looking at how can utilise digitisation in corporate business such as trade finance. Of course, the presence of multiple players in the business makes it more challenging than technology adoption in retail business, but there are a number of pilot projects where the bank is participating in.

“For us digitisation is not focused on cutting branches or people. We see stronger growth coming up for us and there will be a lot to do with our people and branches in different areas of business,” said Cook.