Suvo Sarkar, General Manager – Consumer & Elite Banking, National Bank of Abu Dhabi. Image Credit: Supplied

Abu Dhabi: Banks must be held liable for their revenue losses in the past few years because they relied too much on lending, and focused more on market competition rather than implementing ethical responsibilities toward their retail customers.

These are the words of Suvo Sarkar, General Manager — Consumer and Elite Banking at the National Bank of Abu Dhabi (NBAD), who pointed out that until about two years ago many banks offered loans of up to 60 times their customers' monthly salaries.

NBAD is the only UAE bank among 50 other global banks that has managed to maintain its standing in Global Finance's list of the world's safest banks this year. It had total retail banking revenues of Dh1.5 billion in 2009 and a growth rate of 15 to 20 per cent in 2010, with over half a million customers, and an ambition to double their revenues in the next five years.

Conservative policy

"NBAD thankfully had a very conservative lending policy in the past. Our loss rates are less than half the average of other industries, due to a good mix of Emirati and expatriate customers.

"I do believe however, that the banking industry in the UAE, even though it suffered many turbulences, will get back on track in the next 6 to 12 months," said Sarkar.

Now banks are more cautious, and the over-lending is not occurring any longer, he said. The high loan demand before the financial crisis mostly went towards property investments, the stock market or consumer durables (cars and assets), he added.

"Today consumers borrow loans to help educate their children or take part in an investment for the future. People are more focused on wealth preservation as opposed to growth," Sarkar told Gulf News during an interview on the sidelines of the Middle East Retail Banking Conference 2010.

The banking expert's participation in a panel discussion during Middle East Retail Banking 2010 helped him reconfirm his belief that retail banking has to change considerably, from lending to saving, and from being product driven to customer driven. "Banks now face challenges with liquidity and are worried about delinquencies and loss.

"Customers are becoming more prudent about borrowing, which is a perfect opportunity for us as bankers to move towards ethical banking standards that can help provide customers with what's right for them, and not just what's right for the bank," he said.

Key factors

Some of the key factors that can contribute to the success of the banking sector, believes Sarkar, include the use of reliable technology such as mobile banking, which was only introduced in NBAD three months ago, under the name Arrow.

"Through mobile banking customers can easily transfer their money under a secure mechanism. The product services all our customers," Sarkar said.