Abu Dhabi Islamic Bank (ADIB) said on April 30 it expects to sustain profit growth this year as it expands its United Arab Emirates (UAE) network to meet rising demand for Islamic banking. ADIB also plans to expand its operations in the Middle East and North Africa region, Chief Executive Tirad Mahmoud told Reuters in an interview, without being more specific.
"We have several irons in the fire," he said, noting the bank was "very bullish" about the UAE market. "Our deposits have grown 37 percent in first quarter 2009 over Q1 2008 and 10 percent over Q4 2008 when others are seeing a drop in deposits. So we will open branches."
"We are looking at 18 new locations in the UAE this year and the next to take the number of branches from 45 to 70 by 2010 end. Many new branches are in their final stages of opening." Demand from the world's 1.3 billion Muslims for banks and investments that comply with their beliefs has soared, and assets that comply with Islamic law range between $700 million and $1 trillion, with some estimates seeing assets growing to $1.6 trillion by 2012.
Plans to convert its Egyptian subsidiary, the National Bank for Development, into an Islamic bank by the end of this year are on track, he said. Mahmoud said the lender is "very liquid" and has no plans to take advantage of the international bond market. "We don't intend to borrow, we will grow our customer deposits. We do not need to borrow right now."
On April 29, ADIB announced a first-quarter net profit of 268.3 million dirhams ($73 million), up nearly 10 percent, mainly from its core business. ADIB said it was cautiously optimistic for the year because of rising defaults. The bank's operating margin grew by 28 percent, he said. "So why wouldn't we spend. And our core business is growing at high double digits." The bank is concerned about defaults from customers who have borrowed to invest in real estate and stock, he said without giving figures. "The defaults are coming from these two segments mainly and from both big and small customers," he said. "This market was heavily invested in real estate and stocks and both asset classes have taken a beating. When these deteriorate, their ability to service obligations also deteriorate."
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