Noor Bank’s new direction will focus on becoming more contemporary and forward-looking and at the same time maintain the values and principles of a Sharia-compliant bank. Image Credit: Clint Egbert/Gulf News

Dubai: Noor Bank after undergoing a recent management overhaul is working on a strategy to emerge as one among top ten contemporary Islamic banks in the world. The focus of the new team that took charge a year ago is to change the overall vision of the bank.

“We have a new direction and strategy that will focus on becoming more contemporary and forward looking in what we do and at the same time maintain our values and principles of being a Sharia-compliant bank,” said Mufazzal Kajiji, Head of Retail Banking, Noor Bank.

As far as the product and service mix is concerned Noor has all that is on offer at conventional banks. The bank has retail banking and within retail, it has wealth and business banking propositions.

 We have a very long way to go and we are moving along a very carefully drafted three-year strategy. Within that the retail banking is going to be changed as more of an affluent-focused strategy.”

 - Mufazzal Kajiji  | Noor Bank’s retail banking head

Typically, from a business stand point, Noor is structured like any other bank, offering corporate banking and treasury, financial institutions and investment banking services.

Noor’s current balance sheet puts it in the tenth position in the UAE. In the retail business the bank has refocused its attention on the affluent and emerging affluent segments of the business.

“We have a very long way to go and we are moving along a very carefully drafted three-year strategy. Within that the retail banking is going to be changed as more of an affluent-focused strategy,” said Kajiji.

The new product proposition and customer experience plans will be focused on the emerging affluent and affluent segments of the market. “What we are really looking to acquire are from salary segments in Dh20,000 and upward, where we have the option of extending our product and service offerings including wealth and private banking services,” said Kajiji.

The bank is targeting the white-collar employees who form the emerging affluent segment and as they progress in their careers they become affluent and potentially evolve as customers for wealth management and private banking. “We want to be a part of the career journey of these segments, offering them the tailored product and service mix at every level of their income growth,” said Kajiji.

Tough market

Noor recognises that the retail banking business is tough in terms of quality and quantity of acquisitions as the UAE market is a very competitive. But the bank sees opportunities to work on a business strategy targeted on the growing population of professionals in the country.

“There has been a flow of customers to our bank in recent months, maybe because we have changed our propositions. I don’t see that [new acquisitions] as a huge challenge for us,” he said.

Loan growth in the UAE, especially in the retail segment, has been slow over the past few quarters. Despite the difficult market environment, Noor expects to see growth from its market target segments.

“Bigger banks may be facing some challenges in [loan] growth. Given the size of these banks, they are catering to all segments of the market resulting in distribution of their resources across all segments. But banks like us that are in the next tier, which are growing banks, have a very clear focus. Our [assets] growth is still in double digits and we expect to maintain it,” said Kajiji.

On the liability side of the business, Noor expects to see double digit growth in the next 12 to 24 months. A rising interest rate environment brings in more deposits as people are attracted to higher returns. From the banks’ point of view, the yields on deposit products, especially current and savings accounts (CASA) start to become more profitable as rates increase.

Kajiji does not subscribe to the idea of Islamic banking having access to cheaper deposits as customers are increasingly looking for value and higher returns. “To meet the customer expectations in a very competitive market, like all others, we too have to deliver best-in-class products and services and these comes with costs,” he said.