The Business Year

Mohammad Nasr Abdeen

UAE, ABU DHABI - Finance

Retail Is Detail

CEO, Union National Bank (UNB)


As CEO of Union National Bank, one of the leading banks in the UAE, and the only bank owned by the governments of Abu Dhabi and Dubai, Mohammad Nasr Abdeen is as dynamic and success driven as the organization he heads. He oversees the activities of the UNB Group and its subsidiaries, managing a team of over 1,800 employees. He has led the bank’s expansion strategy through subsidiaries including the Union Brokerage Company and the Al Wifaq Finance Company, offering sharia-compliant solutions. UNB has significantly expanded its retail reach in recent years, with branches in Egypt, Qatar, Kuwait, and an office in Shanghai.

"In retail banking, you need to always be cooperative and have an understanding of customer needs as these needs change."

What have been some of the key highlights at Union National Bank (UNB) over 2014?

Reviewing our financials, we have maintained a consistent growth course, recording a profit of AED1.584 billion for 9M2014, achieving an increase of 10% compared to the corresponding period of the previous year. Our profit for 3Q2014 was AED552 million, up notably by 22% compared to the same quarter of 2013 and an impressive 6% QoQ, principally driven by an increase in volumes across our various business segments. The UNB Group’s performance in 3Q2014 maintained its upward trend, with the Group announcing a record profit. We remain focused on sustainably growing our franchise and business. The key to success of our business model is its strong customer-oriented strategy, providing a wide array of award-winning products and services and our persistent endeavor to enhance the customer’s experience.

How would you describe the position of UNB in the UAE’s financial sector?

We have consistently strong ratings from Moody’s Investors’ Service Ratings, Fitch Ratings, and Capital Intelligence, with all three ratings reporting a “stable” outlook for the bank. At UNB, we have improved our activities, services, and products over the years in order to be a good partner in the banking industry so as to support the economy and the country. We have an Islamic finance arm called Al Wifaq Finance Company. UNB established the first brokerage company in the UAE, Union Brokerage Company (UBC), as well as a sales and marketing services company, Injaz Marketing Management. We understand the market fully, and we focus on this aspect of our business. We are selective about where we engage outside the UAE. Currently, we have a presence in Egypt through a 96.6% owned subsidiary. While UNB has a representative office in China, and a presence in Kuwait and Qatar, we are not aggressive about expanding to every country in the world. We select markets in which we are able to manage our business.

“In retail banking, you need to always be cooperative and have an understanding of customer needs as these needs change.”

How have the bank’s activities grown since it was first established?

We started as a small bank in the early 1980s. When this bank was established, it was mainly a corporate finance bank. After about a decade and a half, we started introducing retail banking aggressively, but in a planned manner. Now, we are a major player in retail banking and SME activity. We have an active investment group taking care of our customers’ needs and priorities. We manage different types of business from retail to corporate to small business, investment, and structured finance and we continue to make investments in support of future growth.

In terms of retail banking, how would you describe your customer base, and what are their financial needs?

When we talk about retail banking, we are talking about consumers, such as individuals who may be salaried or unsalaried and are starting small businesses. In terms of customer numbers, our customer base is between the third and fifth largest in the country. The products that we provide are well designed. We have an experienced and well-qualified team that has been involved in retail banking for a long time. UNB is active in retail, which is necessary because the competition in the market is strong nowadays. We are able to maintain our market share, but the most important thing is maintaining a high level of customer satisfaction.

When it comes to your products, how do you compete with other banks in the UAE?

In retail banking, you need to always be cooperative and have an understanding of customer needs as these needs change. Retail is detail; you have to see the market, see the competition, and customer needs. It is easy to introduce a new product and even easier to be copied by the competition. When you introduce a product you publish all the details, which means you make it available to the competition before even making it available to customers. Competitors can take products and bundle them in a different way or add extra benefits but the one thing that cannot be copied is the quality of service. You have to be service oriented, honest, and transparent with your customers. For banks involved in retail banking, this is the main factor that differentiates one bank from another. We are the number one in providing quality service, and it is our main focus.

How have the needs of customers changed in recent years?

The main trend is a growing need for electronic services. The new generation is very familiar with this, and they do not want to come inside the branch and stand in a queue. They want to be able to do their banking while sitting in their office or on their phone. The development of these kinds of capabilities is very crucial for any bank that thinks about the future trends of customer needs and satisfaction. With mobile banking, we are making good progress in that regard and our teams are looking at making improvements so that we are available to the customers wherever they may be.

What is your analysis of UNB’s 10% increase in profit in 3Q2014 compared to the corresponding period in 2013?

First, we have a strong credit culture. We plan our actions well, and we do not take excessively high risks. It is well known that UNB is more conservative, which was at one point taken as a negative. When 2008 came, it turned out to be a great point in our favor. Many others began complimenting what we had done. We are consistent. We stick with credit principles and take calculated risks. We identify the segments we want to deal with, and we understand them. We have specialized people in each industry. The bank understands in detail the customers’ needs and plans, and it works as a partner with the customer. We take the necessary action when the time is right. We are not the kind of bank that changes according to the news. We are consistent because of our conservative approach.

How have the central bank’s policies affected UNB and the financial sector as a whole?

The central bank has definitely been pro-active and has made solid decisions, although it caused some pain for the banks and affected profitability when they started dealing with certain regulations related to ceilings and the retail business. I believe this was a great step because it’s not a matter of giving money to each and every individual who may not be able to afford the repayments. The central bank realized this and put in place certain guidelines. When we talk about high exposure, the banks felt happy to invest in the government because it is risk-free—almost. The banks have been trying to focus on what the government needs and directing their resources in that direction. Different sectors require different needs just to make the economy grow. Putting a ceiling on banks in this regard pushed them to look for viable business, which was good for the economy.

What is your assessment of the growing Islamic finance segment?

As with conventional finance, it is a matter of putting in certain guidelines to mitigate risk, but if you go deep into Islamic financing, you will find the risk elements are the same. I cannot see a difference in risk; the difference I see is in the titles that have been used for certain Islamic financial products and services. It is a growing segment, but at the same time it is not a replacement for the conventional way of banking. We, at the banks, look at the customers’ needs, and if there is a niche in the market for sharia-compliant banking, we cannot ignore it. Our Islamic finance company Al Wifaq is focused mainly on the retail business. This segment is growing, but at the same time, it is still an alternative to conventional banking.

How is UNB expanding and increasing its network reach?

We have increased our ATM network and have over 250 ATMs in the UAE today. In 2013, we opened 10 branches in the UAE and four new branches in Egypt to further increase UNB’s presence in these markets. With the expansion of cities here, we go to where our customers need us. Our first priority is to keep our level of expansion internal. The second priority is to be in GCC countries. We are in two now, Kuwait and Qatar. Saudi Arabia is a major market, and if we have the opportunity we will expand there also. We are also looking to Oman. We have doubled our capital in Egypt, and we are also doubling our capital at Al Wifaq. However, our first priority will always remain the UAE.

© The Business Year – November 2014



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