Confidence in the UAE banking sector is regaining momentum, and justifiably so, taking into account a string of new opportunities and recent results that serve to suggest the industry’s prospects are on the up.

The clearest indication of the country’s banking boom can be seen in Moody’s’ UAE banking system outlook, which was upgraded from negative to stable late last year, owing to a strong funding and liquidity profile, as well as a cash-rich federal government.

The ratings agency’s improved outlook also reflects improvements in the region’s operating environment, a recovering real estate market and the capital buffers that have remained intact since the global financial crisis took hold in 2008. All in all, banking in the UAE looks set to experience something of an explosion in the months and years ahead.

The importance of Union National Bank (UNB) and the wider UAE banking sector in shaping the country’s future will be aided by the World Expo 2020, which is due to be held in Dubai. The event will no doubt act as a catalyst for growth, and authorities estimate that it could generate upwards of $23bn – 25 percent of Dubai’s GDP – over the course of the next seven years or so.

The UAE’s GDP as a whole is predicted to rise two percent as a result of the event, and investment in infrastructure is widely expected to skyrocket to an unprecedented level. The inflows that will come as a result of Expo 2020 should also present UNB and the wider banking community with an opportunity to expand their existing international connections and reap their fair share of rewards as a result of increased bank borrowing and cash flow.

Leading an industry
Aiming to be the best requires an organisation to be a leader. The edge we maintain comes from being simultaneously progressive and prudent. Our policies are built along sound and conservative lines and are translated into efficient processes and sensible procedures.

Our 2010-18 vision is to position UNB as the best in class for the banking industry in the UAE. Moreover, our mission for the years 2013-15 reads “through innovation, staff well-being and outstanding customer service, we will grow shareholder value and maintain our financial stability,” which offers an indication of the bank’s ambitious objectives for the years ahead.

The bank’s impressive reputation has not come about overnight, and is the result of over three decades of work and experience. First established in 1982, UNB is the only financial institution in the UAE with significant shareholdings shared between the governments of both Abu Dhabi and Dubai, who hold 50 and 10 percent respectively, while the bank’s remaining 40 percent is listed on the Abu Dhabi Securities Exchange and held by public parties. In essence, the bank’s shared ownership structure is in itself indicative of that spirit of collaboration and community.

The bank operates through a network of 66 branches and over 220 ATMs across the UAE. It has also extended its reach to Egypt with the acquisition of ACMB, and today operates under the name of UNB Egypt there, with over 30 branches in the country. UNB has also opened a representative office in Shanghai, thereby becoming the first bank in the region to do so. UNB was also granted a licence to operate in Kuwait in 2011 and has been growing in stature there ever since. Moreover, the bank has a fully functional branch at the Qatar Financial Centre, Doha.

As a result of the bank’s progressive policies, operating income for 2013 rose to AED 3.2bn, a four percent gain on 2012’s AED 3.1bn equivalent. In addition, the group added a further 14 branches to its existing network, bringing UNB’s total footprint to over 100 branches spanning five countries. UNB’s coverage is even more impressive when taking into account that at the beginning of this century the company was a standalone bank, whereas today it represents a group of business entities that span share brokerage, Islamic finance and provision of captive sales support, to name a few.

Taking responsibility
Just as important to the country’s burgeoning banking sector, alongside sound financials, is its ethos of responsibility, which has come to play a huge part in spurring the UAE’s wider economic and social development of late. UNB has set a corporate social responsibility (CSR) high point for the country’s banks, and its commitment to matters beyond financial performance have helped cement its reputation as one of the industry’s leading forces.

UNB’s core philosophy is embedded in its tagline ‘the bank that cares’; it views its stakeholders as partners and customer satisfaction as a key indicator of success. The bank measures these parameters on a regular basis through satisfaction surveys, benchmarking, mystery shopping schemes and various other methods to ensure its brand image and reputation continues to be enhanced; the underlying principle being that a commitment to humanitarian and social causes is mutually beneficial for both the bank and the UAE community at large.

Having weathered the worst of the post-crisis jitters, the UAE’s banking sector is well positioned
to exploit emerging
market opportunities and expand upon its international renown

In this past year alone, UNB has pursued a number of initiatives as part of its ambitious CSR programme, and contributed to all manner of causes. Among the most notable of the bank’s initiatives in 2013 was an agreement with the Make a Wish foundation; sponsorship of the Autism Awareness Campaign organised by Emirates Autism Centre and the Zayed Higher organisation for Humanitarian Care & Special Needs Event; and ongoing cooperation with the Mafraq Hospital in hosting a special awareness lecture concerning breast cancer. These actions are but a select few examples of the bank’s past year of work, and offer an insight into the impressive contributions it is making in terms of CSR.

To believe in and commit to sustainable management is fundamental to ensuring quality for our stakeholders, in all aspects of our business. UNB does not invest in sustainability for publicity; we do it for conviction. Our inaugural sustainability report was rated ‘A+’ by the Global Reporting Initiative, and we have committed to publishing our independently validated sustainability KPIs every year.

UNB’s success delivering on its promise of superior customer service and CSR has cemented the bank’s reputation ahead of its competitors as a pioneer in the banking space. Without the influence of parties such as UNB, the UAE banking industry would not have the clout it has today in dealing with matters of major social and economic importance.

Regardless of the bank’s impressive performance, there still exist a number of challenges. The environment for business and banking has become much more demanding; margins are under pressure; the pace of business (aided by modern technology) is accelerating as we speak. The biggest challenges we face start with human capital, especially growing and retaining talent, staying focused on innovation and the inevitable rapid technology changes, as well as cyber security.

Having weathered the worst of the post-crisis jitters, the UAE’s banking sector is well positioned to exploit emerging market opportunities and expand upon its international renown. Considering the challenging market conditions that arose during the world’s recent financial turmoil, UNB has continued to deliver solid results by maintaining strong liquidity and proactively managing its asset quality under the guidance and visionary leadership of its Chairman Sheikh Nahayan Mabarak Al Nahayan. UNB is aware that the road ahead is paved with both risks and opportunities, and is taking the lead in responding to these issues by considering sustainability as a vital part of its business strategy.