Faced with uncertain times in the wake of falling of oil prices and instability in the region, several banks in the United Arab Emirates (UAE) have looked towards Asia as a new source of growth for their wealth management businesses.
Recently the National Bank of Abu Dhabi (NBAD) announced it would increase the onboarding of Asian clients. As one of the largest domestic banks in the Middle East, NBAD recorded an 89% growth in net profit for 2014 for its global wealth division. Despite the solid growth, NBAD wants to further enhance its fee-paying businesses through services such as wealth management. The bank plans to open an office in India this July, their first in that country.
Similarly, its domestic peer First Gulf Bank (FGB) last year launched its wealth management service in Singapore. FGB hopes to enhance its products and offerings for its existing clients by giving them greater access to the Asian region. FGB made a further push in establishing its Asian infrastructure by opening a representative office in South Korea. The bank has plans to open another office in China in the near future.
Asian interest from UAE banks isn’t only reserved to wealth management. The Dubai Islamic Bank (DIB) last year bought a 25% stake in Indonesian PT Bank Panin Syariah in an attempt to expand its overseas lending capabilities. Posting a 63% growth in profit last year, DIB has its eye focused on diversifying revenue streams to keep growth sustainable.
But alhough it is exciting for banks to enter new markets, it also comes with its challenges. UAE banks wanting to capture a good share of the growing Asian wealth flows will have to compete with more established players. With the likes of DBS and IIFL Private Wealth Management in some markets, these UAE banks will have to offer a unique value proposition to stand out amongst the crowded pack.
