Conservative lending helps UAB maintain earnings momentum

While most banks in the UAE focused on unrestricted growth during the past four or five years, there were few banks such as United Arab Bank (UAB), that chose to tread a conservative path serving its loyal clients and adding quality to its offerings. This has paid off, according to Paul Trowbridge, Chief Executive of UAB.

"We do not have any toxic assets on our books and we have been able to improve our earnings quarter after quarter," he said. Trowbridge took over the reins of this Sharjah-headquartered bank in December, at the peak of the financial crisi. Following are excerpts:

The results of UAB were good for the first quarter. But assets have come down during this period. Can you explain this?

We have always been conservative on lending; we have not been lending heavily in the property market. This has been the reason why our results have always been good quarter after quarter. Historically, we have a strong concentration on trade and manufacturing in the UAE. Since these sectors have taken a hit due to the recession, it is quite natural for our businesses to go slow during this time. When the economy shrunk, some of our clients reduced their working capital and other debts. Many of our clients have faced less demand for their products, and this has reflected in the volume of lending to them.

Having said this, we don't see any deterioration in our customer base. UAB maintained its earnings momentum recording net profit growth of 21 per cent to Dh66 million for the first quarter ended March 31, 2009, compared with Dh55m achieved during the same period last year. This improved performance is due to a combination of factors, specifically the efficient utilisation of our financial resources, adaptable marketing strategies, continued policy of diversification, renewed focus on getting closer to our customers, lowering the cost of funding, and close monitoring of our operating costs and processes.