Gains in Islamic banking and consumer operations in Qatar as well as Egypt are seen further bolstering Mashreqbank’s expansion

Bloomberg
Dubai

Mashreqbank, the UAE lender owned by the billionaire Al Ghurair family, expects retail-banking profit to climb by more than 20% next year even as concerns increase about the rising number of small company owners fleeing the country, leaving unpaid debt.
Retail assets, which account for about a third of earnings at the Dubai-based lender, will expand at a “mid-teen” clip in 2016, helped by its wealth, insurance and small-and medium enterprise businesses, Farhad Irani, Mashreqbank’s head of retail banking, said by phone recently.
Gains in Islamic banking and consumer operations in Qatar and Egypt will further bolster expansion, he said. The bancassurance and wealth management divisions should benefit as the UAE builds its position as a regional business and tourist hub, he said.
Falling oil prices are weighing on the UAE economy and have started to lead to business failures, with owners responsible for about 5bn dirham in defaulted loans estimated to have fled this year, UAE, Banks Federation chairman and Mashreqbank chief executive officer Abdulaziz al-Ghurair has said. The rising number of “skips” won’t reduce the segment’s importance to the market, Irani said.
“SME business will remain the core of the economy, notwithstanding the recent spate of skips witnessed across the industry, plus the increasing regulatory scrutiny directed at this segment,” he said.
A more than 40% drop in crude prices over the past year is expected to hurt UAE government revenue, slowing growth in the second-biggest Arab economy. The slump is already leading to an increase in loan defaults, with loss provisions at Abu Dhabi-based Union National Bank jumping 57% in the third quarter and United Arab Bank swinging to a loss from a year-earlier profit in the period.