Bloomberg News

Emirates NBD Says Small, Medium Business Lending Growing by 30%

October 04, 2011

Oct. 4 (Bloomberg) -- Emirates NBD PJSC, the United Arab Emirates’ biggest bank by assets, said its lending to small and medium-sized companies has grown 30 percent this year and it plans to double that business over the next three years.

The Dubai government-controlled lender is boosting loans to small companies in the tourism, logistics, transportation, trading, food and beverage and services industries as economic growth rebounds in the second-biggest Arab economy, Vikas Thapar, Emirates NBD’s general manager for consumer finance and head of business banking, said in a phone interview yesterday.

“Dubai historically has been a haven for small and medium enterprises,” Thapar said. “SMEs were never over-leveraged, so they never had that kind of a negative impact from the crisis. Their cost-structures are low and decision-making is fast.”

Dubai, the second-biggest state in the U.A.E., was hit by the global credit crisis as property prices crashed, trading and tourism dropped and bank lending slowed. Economic growth in the emirate may accelerate to 3.5 percent to 4 percent this year from 2.8 percent in 2010, according to Citigroup Inc.

Emirates NBD, which reported a 2 percent decline in lending in the first half, expects its loan book to expand by 1 percent to 2 percent over 2011, Chief Executive Officer Rick Pudner said July 25. Overall lending by U.A.E. banks has increased by 2 percent in the eight months through August.

Emirates NBD has doubled the number of its small- and medium-sized business customers in the past three years to 50,000, and offers them loans ranging from 100,000 dirhams ($27,229) to 50 million dirhams, Thapar said. The interest margin, a measure of profitability, from the SME business exceeds that of the bank as a whole because of much lower loan- loss charges, he said.

Lending to small and medium-sized companies makes up 4 percent of overall industry loans, Thapar said, citing a World Bank investment study.

U.A.E. banks had 1.06 trillion dirhams of loans outstanding at the end of August, according to central bank data.

--Editors: Keith Campbell, Steve Bailey.

To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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