Bloomberg News

U.A.E. Retail Bank Revenue to Drop 10%-15% on Rules

October 03, 2011

(Corrects number of customers in fifth paragraph of story first published Oct. 2.)

Oct. 2 (Bloomberg) -- United Arab Emirates banks’ revenue from their retail business will probably decline 10 percent to 15 percent because of new central bank rules that took effect in May, an Abu Dhabi Commercial Bank PJSC official said.

“There will be a rebasing or a shrinkage of revenue” because of the rules like the cap on fee income, the prescribed debt-burden ratio and the higher margin on auto loans, Arup Mukhopadhyay, the bank’s executive vice president and head of consumer banking told a news conference in Abu Dhabi today. The affect, which will be muted this year since the measures were implemented in May, will restrict retail loan growth to less than 5 percent in 2012, he said.

The U.A.E. central bank imposed rules for retail banking and fees that capped personal loans at 20 times a borrower’s monthly salary and the repayment period at 48 months. They also restrict overall installments for all loans, including personal, car and housing loans, and credit cards to 50 percent of a borrower’s gross salary and any regular income. The regulator also capped fees for several consumer banking transactions.

Abu Dhabi Commercial announced today it would waive fees for retail banking customers for transactions and services on their personal current and savings accounts. The fees waived include those on remittances, check book charges, debit cards, for setting up standing instructions and demand drafts. Customers will be allowed six free transactions a month.

Retail Market

The bank, which has a retail market share of about 11 percent, has about 500,000 customers and the loss in fee income from the initiative will be compensated by an increase in customers and the number of transactions, Mukhopadhyay said. Retail lending will rise 10 percent this year, he said.

Abu Dhabi Commercial’s profit from consumer banking fell 27 percent in the six months to June to 122.9 million dirhams ($33.5 million), according to its quarterly results report. Revenue from the segment rose 36 percent to 1.44 billion dirhams and made up 52 percent of the bank’s overall revenue.

--Editors: Shanthy Nambiar, Susan Lerner

To contact the reporter on this story: Arif Sharif in Dubai at

To contact the editor responsible for this story: Claudia Maedler at

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