x Abu Dhabi, UAEMonday 23 October 2017

Emirates NBD most trusted lender in UAE, Brand Finance Banking survey finds

Dubai-based bank also the most popular, poll results show

Exposure to construction and real estate sectors for UAE lenders is currently limited by the central bank to a maximum of 20 per cent of total deposits and interbank borrowing of an individual bank. Sammy Dallal / The National
Exposure to construction and real estate sectors for UAE lenders is currently limited by the central bank to a maximum of 20 per cent of total deposits and interbank borrowing of an individual bank. Sammy Dallal / The National

Emirates NBD, Dubai’s biggest bank by assets, is the most trusted local lender in the UAE and has the most loyal customers, according to a survey by Brand Finance Banking.

Bank clients surveyed by Brand Finance Banking, based in the UK, found that 74.6 per cent of respondents perceived Emirates NBD to be the most trusted bank in the UAE. Thirty-six per cent of respondents said they were very unlikely to switch. Emirates NBD topped out with 15 per cent of those polled saying they would switch to the Dubai bank.

“In general, the UAE banking market is more flexible when it comes to customer preferences than some of the long-established banking markets, especially Switzerland, the US or Britain,” said Andrew Campbell, the managing director for the Middle East at Brand Finance.

“Growth-market customers are generally more likely to switch between bank brands - in the UAE on average 27.5 per cent customers declare they are ready to try banking with the competition. This is also the case, for instance, in India, where on average 34.5 per cent of customers state that they are likely to switch.”

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At the other end of the spectrum, Union National Bank was perceived to be the least trusted local bank and those who banked at First Gulf Bank (now First Abu Dhabi Bank after its merger with the National Bank of Abu Dhabi) were most likely to move to a competitor, with 31.4 per cent saying they were very likely to switch.

The data was compiled in 2016 before the Brand Finance Banking 500 2017 release.

Emirates NBD is also one of the most profitable banks and has held its own financially in the past couple of years when economic growth has slowed and many banks suffered big losses from lending to small and medium-sized enterprises that then went bust.

Emirates NBD said in July that its second-quarter profit rose 5.8 per cent, due to higher loan rates, tighter expenses and lower provision costs.

The lender also said that as a result of cost cuts last year, it was investing Dh1 billion in digital technology over the next three years – a move that is in line with underlying shifts in the banking industry.

Globally, banks are increasingly streamlining their physical presence and investing in technology and “digital wallets”, shifting their focus to mobile services as they vie to increase customer bases.

The investment in digital is likely to reduce Emirates NBD’s costs further.

Although the combination of First Gulf Bank and National Bank of Abu Dhabi has displaced Emirates NBD as the biggest lender by assets in the UAE, observers say it will be resilient. Moody’s Investors Service said in July Emirates NBD would surmount the challenge of losing its market-leading position.

The rating agency noted that the lender would continue to finance infrastructure projects ahead of Expo2020 and that competition with First Abu Dhabi Bank would be softened by the limited overlap between the two banks.

Brand Finance researched 19,000 people in 22 markets to gauge opinions in an era of major industry disruption with the proliferation of online lenders and other brick and mortar banks.