The Al Ahli Bank of Kuwait opens its first branch in the UAE capital and will forge ahead with expansion plans throughout the GCC.
Kuwait bank opens in Abu Dhabi
Al Ahli Bank of Kuwait opened its first branch in Abu Dhabi yesterday and is pushing ahead with expansion throughout the GCC this year despite testing times for the regional banking sector. "The launch was on time and not delayed [by the financial crisis]," said Abdulla Alsumait, the deputy chief general manager of Al Ahli Bank. "We plan to expand across the UAE and in other GCC countries... the crisis shouldn't discourage banks and financial institutions [from normal activity]." The bank, which opened a branch in Dubai in 1986, aims to use its Abu Dhabi facility to provide services to multinational firms in the oil sector, government projects including property and infrastructure ventures, and Kuwaiti customers. It has plans to open three offices in Kuwait this year and is awaiting approval from financial authorities in Qatar and Oman to open branches there. "There is always room for activity. The [financial crisis] is affecting the entire world but we have to keep moving, not stop," said Saeed Abdulla al Hamiz, a member of the Central Bank, regarding the decision to grant Al Ahli a licence to increase its presence in the Emirates despite the difficult lending conditions. While the financial crisis has not completely derailed expansion plans for the Kuwaiti bank, plans are not as "aggressive" as initially intended. "We had approval in September [from Kuwait's central bank] to increase capital by 20 per cent at the bank but it was for more aggressive expansion plans which we no longer need in 2009," said Mr Alsumait. "We have already hired 20 people for the Abu Dhabi branch; this is the time to control expenses and look at where we don't need to spend extra, for example on marketing, and focus on products, training and hiring." Analysts say that Al Ahli will battle to attract deposits. "Banks here are competing for deposits. It is a difficult time to come into the market [for a new lender]," said Yazan Abdeen, a fund manager at ING Investment Management. The bank is not immune to the financial crisis that has evaporated credit and caused problems in the Kuwaiti sector, although it is still performing relatively well, according to bank executives. "I can't say that Al Ahli is completely free of trouble, but it is less so than other banks; we don't need to borrow funds for financing in 2009-2010 and our liquidity situation is excellent," said Mr Alsumait. He added that the firm had no investments in overseas markets nor derivatives and did not expect net profits to have dropped more than between 10 per cent and 15 per cent in the fourth quarter last year. Last month, Global Investment House, Kuwait's largest investment bank, defaulted on a US$200 million (Dh734.6m) syndicated loan payment in a move that exposed the bank's vulnerability to the financial crisis. In the first week of this year, the Kuwait Investment Authority, the nation's sovereign wealth fund, began buying shares on the Kuwait market to shore up trading which had been weakened by the crisis. Bank executives at Al Ahli remain optimistic for prospects in the region. "I wouldn't deny that conditions are tight, but there are opportunities," said Mr Alsumait. email@example.com see page 8, Banking