BEIJING // Profit doubled at the Middle Eastern division of China's biggest bank last year as its business expanded on the back of growing trade between GCC countries and the world's second-largest economy.
The Industrial and Commercial Bank of China (ICBC) announced this week that its Middle Eastern unit, based in Dubai, generated US$31.77 million (Dh116.6m) of profit in the first 11 months of last year.
This is more than double the figure for all of 2010, Tian Zhiping, the bank's Middle Eastern chief executive, told China's state-run Xinhua news agency, also reaffirming the company's desire to build a retail presence in the Emirates.
Mr Tian said the state-owned bank had been little affected by the unrest in parts of the Middle East last year, as on-balance credit exposure is concentrated in stable parts of the region, principally the UAE, Qatar, Kuwait and Saudi Arabia.
ICBC, which entered the Middle East in 2008 and has branches in Dubai, Abu Dhabi and Doha, has since March last year been offering the Chinese yuan as a means to settle transactions, and the growth in profit has been partly driven by more companies using the currency to close deals.
Ben Simpfendorfer, the managing director of Silk Road Associates, an economic and political consultancy based in Hong Kong and specialising in the Middle East and China, tied the rapid growth of ICBC's profit in the Middle East two factors.
"The first is that these banks have only recently opened up [in the Middle East], so they will be picking up business from Chinese businessmen who were banking with foreign banks," he said.
Second, he said, ICBC was a "natural beneficiary" of the growth in commercial relations between the Middle East and China. The real revenue generator for ICBC in the Middle East is trade finance, and there have been many indications that UAE-China trade was increasing rapidly.
Abu Dhabi's Department of Economic Development indicated that in the first six months of last year, non-oil trade between the emirate and China jumped nearly two thirds to Dh2.16 billion, from Dh1.32bn for the same period in 2010.
"Consumer goods trade has always been fairly strong. It's picked up more since the [economic] crisis," Mr Simpfendorfer said of China trade with the Middle East.
"Chinese firms will be looking to source construction materials. Not all of that will be direct from China. Some will be imported by wholesalers. That's probably where they're doing better business - supporting companies," Mr Simpfendorfer said. "I wouldn't be surprised to see a growing number of firms doing business in North Africa and deciding to settle some of their business out of Dubai."
Mr Tian reiterated to Xinhua that ICBC wanted to open retail banking operations in the UAE. This would aid the bank in offering products such as remittance services and credit to the 200,000 Chinese citizens living in the UAE. ICBC is also looking to offer asset management and investment banking services in the UAE, Mr Tian said.