What do you think was behind NBF’s strong results in 2023?
Well, before I attribute the strong results to various businesses, I would like to call out differentiating factors which underpin who we are and the drivers of our results. We are blessed with strong set of shareholders and a supportive Board focused on long-term success, coupled with one of the most highly engaged teams in the GCC banking sector, who have been instrumental in enabling NBF to become a truly partner bank. We have been able to differentiate on service and creating value for our customer. These strengths have helped us in growing a sustainable business and to achieve a record set of results in 2023 and earlier.
In terms of business-specific achievements, our core businesses like SME and commercial banking, trade finance, retail banking, treasury and financial institutions business have performed significantly better in the last few years. We have worked hard in recent years to develop a strong balance sheet with disciplined and efficient use of capital that benefited in a high interest rate environment. That helped immensely in our 2023 results.
Our CASA (Current Account and Savings Account) balances and operating accounts have grown and performed well. We increased our investment portfolio in high quality investment grade bonds, which outperformed the market indices by three to four times through active management by our ALM (Asset and Liability Management) team.
Our focus on quality means that we manage our portfolio in a very professional manner. Our asset quality indicators are faring better than the industry averages. While all this was happening, we continued to carefully invest for our future, and our digitalisation programme is progressing to enhance our customer experience.
What measures and products does NBF have in place to assist the UAE’s ever-important SME sector?
Well, I see SMEs as the lifeblood of any nation’s economic diversification, and arguably NBF has been the most consistent UAE bank when it comes to SMEs.
We have a dedicated business segment serving SMEs under the brand of Business Banking for more than two decades. The dedicated focus has allowed us to provide tailored products and services to the needs of this sector, and we take pride in partnering for success for a number of SME customers.
The type of products and services we offer to this segment range from simple account management services to loans and advances, trade finance, treasury and all sorts of full-scale banking, as the needs vary given wide spread of SMEs, from small up to a decent size. Digitalisation also plays a really key part, catering right from a simple one-man shop to a more sophisticated business, and we invested in our technologies and solutions accordingly. This has helped with the immense growth. With the growing startup and SME sector in the UAE market, we also developed a marketplace platform with the brand name of NBF Connect.
This platform allows small SMEs and startups to come together and get the benefits, and avail other services like legal, HR, accounting firms and many others going beyond banking to facilitate their wider business needs. At the same time, we are looking into technologies and solutions that can enable these SMEs, particularly startups and micro-SMEs to access banking services much more easily.
How is NBF gearing up to meet the growing emergence of Trade Finance as an important vertical in the banking sector?
Trade finance is a significant contributor to the economic diversification and growth of the UAE. NBF has grown since its inception on the back of trade finance business, almost 60% of our business has some anchor of trade finance and has an award-winning offering that ensures its customers keep abreast of developments in regional and global trade.
The principal way NBF is gearing up is by staying closer to customer needs and investing in its trade finance capabilities across new markets in line with the government strategy, digitalisation of processes to provide superior experience and investing in our team capabilities to enable opportunities for our customers.
NBF has been opening new emerging markets to facilitate its customers flow of trade businesses in and out of the UAE and expanding the network of correspondent banks and partners. The UAE government has been signing SEPA agreements with certain jurisdictions to enhance growth, so it is important that we support our customer journeys in those jurisdictions
In line with our digitally enabled strategy, NBF has been investing in digitalisaiton of processes. Trade is quite technical in terms of documentation and we have implemented new technologies artificial intelligence for enhancing processing speed for our clients. We often come across clients who say that if they need the transaction to be processed on the same day, NBF is the name that comes to their mind, which is very fulfilling.
At the same time, we have invested in our trade finance system which is in the final leg of going live and piloting. This will allow the front and back end to be put into the hands of the customer. The speed, the experience and the self-empowerment going forward is also key as we migrate into new generations of customers. So, these are some of the investments we are making to revolutionise the customer experience in this field.
NBF has also been investing in its people and team to augment its transactional banking and trade finance offering, including advisory capabilities to better serve the evolving needs of the customers.
How is NBF meeting the challenges of building a sustainable banking and ESG framework?
I personally do not see sustainability as a challenge. It is rather an opportunity for all of us to have a meaningful impact, not only on business, but on society as a whole. NBF puts the sustainability and Environmental, Social and Governance (ESG) agenda at the heart of our business. Our journey in this space started a few years back and has been at the heart of our business philosophy. The way we started was by linking our own businesses and our own models to sustainability practices and frameworks.
We had a number of things common between the ESG framework and business strategy, for example, support for SMEs; we also had healthcare and education as sectors of the business, and support for the development of Emiratis and young talent. As a first step, we aligned these to the broader sustainability requirements. We engaged all stakeholders, from shareholders and the board to our employees.
For us the credibility of what we do was more important than quickly jumping into green bonds and the like. With this change in the last couple of years, we progressed further and we started following the principles of the United Nations Sustainability Program, which were more closely aligned to long term collaborative change in this respect, and at the same time, the UAE Net Zero by 2050 Strategy. We are a signatory to the UAE Banks Federation One Trillion Program towards sustainable finance.
Acknowledging the critical role of sustainability to the UAE and its communities, the board approved the sustainability position statement and strategy last year, which is very much aligned with business strategy and has assigned the governance of these matters to the board risk committee, which has been renamed as the Board Risk and Sustainability Committee.
We have been making sustainable progress on a number of fronts; for example, our investment portfolio is already more than 6% ESG-aligned. More than AED 600 million sustainable finance in the space of healthcare and education. We have thousands of SMEs being supported and more than 15% of our portfolio is in that space. The focus on the customer and climate side has been growing and we completed sustainable and renewable energy deals in this space over the last couple of years.
Last year we started engagement with our customers on sustainability through the Living Business Program in collaboration with some external providers. We engaged 16 customers to help them in their sustainable journeys. When we started those programs, we partnered on the business front to promote solar financing, offering green products for our retail as well as business customers. The commercial impact has started becoming more evident, and we are really proud to be making this progress in our business.
Furthermore, over the course of last year we engaged with key stakeholders through a series of strategic partnerships, internal initiatives and policy updates, hosting and participating in sustainability-focused events.
In your forty years since founding, what has been your greatest challenge and your greatest achievement?
Well, that is a tricky one. The way I think about it, I think our greatest challenge and achievement has been the same. 2024 marks our 40th anniversary, and when we started, it was a prestigious beginning, being the National Bank of Fujairah. But from the business standpoint, the challenge was how to find our place in what I think is one of the most competitive markets with a very few players accounting for 80% or more share of the market.
But, we have been successful in overcoming that challenge through a clear focus and carefully chosen niche positions, with differentiated service and by being truly a partnership organisation. Again, with the vision and long-term focus of our shareholders and board of directors, and I would also emphasise our people, we boast one of the most highly engaged teams in the GCC banking sector who have been underlying strengths for our success.
Over the years NBF has built a strong reputation in the industry. Today, we are well-regarded as a trade finance player by our customers and the market, a dominant SME and business banking player, commercial banking player, in treasury and a good corporate bank with niche focus in areas of precious metals and diamonds, energy and marine. We have a growing offering in the real estate mortgage and the retail baking space, and as well as many others, in Islamic banking with NBF Islamic
The awards we have been winning in the space of trade finance, commercial banking, SME banking and the Islamic window are all testament to what we have been able to achieve in our 40 years of history.
There is nothing as fulfilling and rewarding than our customers saying that they have grown and became successful because of NBF being their first partner bank who supported them through thick and thin. It is, all in all quite a proud feeling.
What are NBF’s plans for the remainder of the 2024 and beyond?
While our strategic direction is not changing, we have recently refreshed our vision, mission and values to highlight our commitment to sustainability and our broader focus on retail banking, and what I would also say – a renewed emphasis on customer experience. Why do I say a renewed focus? Because with the digital world, AI and what customers are expecting, we need to reinvent our service model to be relevant in times to come.
The principal focus will remain on growing our franchise with a clear focus on quality and speed of execution. Sustainability considerations will underpin the execution of our strategy and the following areas where we will continue to work harder:
- We will further cement our position as the clear leader in the SME and commercial banking space
- We aim to solidify NBF’s standing as a distinctive trade finance bank in the UAE, emphasizing customer experience in trade finance services.
- We will invest in transactional banking and strengthening product offerings across the business segments we serve.
- We will continue to grow and invest in our retail franchise, particularly in the affluent and priority segment
- We are augmenting our digitally enabled bank strategy, focusing on service value chains across the bank, to provide superior service in the market.
- We will be investing in our human capital with a particular focus on development of local Emirati talent.
In whatever we do, we will ensure that our identity as a relationship and partnership bank is maintained alongside digitalisation. We do not want digitalisation to take away that human and people angle, which we would ensure as we go along.
