When was UNB established and what products and services does it offer?
Union National Bank (UNB) was established as a public Joint Stock Company in 1982, and is currently one of the leading banks in the UAE. The Bank's headquarter is in Abu Dhabi and has more than 45 branches located across the Emirates. The Bank offers a variety of products and services addressing the needs of individual customers and corporate clients. UNB is 50% owned by Abu Dhabi government and 10% by the Dubai government and has a board of directors consisting of prominent business figures; headed by H. H. Sheikh Nahayan Mabarak Al Nahayan, Minister of Higher Education and Scientific Research.
What subsidiary companies does UNB have and what activities do they conduct?
Union Brokerage Company (UBC), one of the oldest brokerage firms in UAE is a subsidiary of UNB. It is one of the leading brokerage firms in the UAE and was among the first national companies to operate in the brokerage field in the country. UBC is located in Khalidiya, Abu Dhabi and has a well diversified branch network with 6 other branches at ADSM, DFM, Al Ain, Al Dhafra, Fujairah and Gold & Diamond Park, Dubai.
Al Wifaq Finance Company is another subsidiary of UNB. It has been established in 2006 with the purpose of offering Sharia compliant financial, commercial and investing services to both organizations and individuals in compliance with the rules and principles of the Islamic Law.
ACMB: UNB has now a presence in the Egyptian banking sector through its successful acquisition of the Alexandria Commercial and Maritime Bank (ACMB). ACMB has nine branches all over Egypt and is planning to further expand its branch network by the end of 2007.
How has the bank performed over the last three years?
UNB's consolidated net profit for 2006 surpassed, once again, the AED 1.0 billion mark, with profit attributable to the equity shareholders of the Bank touching AED 1,007.8 million as compared to AED 452.7 million in 2004, representing an increase of more than 120% over that period.
UNB's growing business in the corporate and retail banking sectors as well as its increased presence in other sectors such as capital markets, private banking and wealth management as well as more recently in Islamic financing resulted in its noninterest income increasing from AED 307 million in 2004 to AED 646.5 million (a 110.6% growth for the period).
The Bank's continued focus on the development and growth of its core business is witnessed by the constant robust growth of its net interest income by 14%, 30% and 29% respectively in 2004 through 2006.
Net Loans and advances increased from AED 16.2 billion at 31 December 2004 to AED 27.5 billion at 31 December 2006, representing a growth of 69.8% for the period. This increase has led to total assets increasing by 68.7% rising from AED 24.6 billion as at December 2004 to AED 41.5 billion as at December 2006.
Customer deposits also registered a healthy growth of 67.6% rising from AED 17.9 billion as at December 2004 to AED 30.0 billion as at 31 December 2006.
UNB has been maintaining a capital adequacy ratio well above the Central Bank's requirement of 10%, with the ratio being 13.1% in 2004, 24.3% in 2005 and 18.2% in 2006.
The operating expenses at AED 386.9 million in 2006 increased by 63.9% as compared to 2004 to support enhanced business activity, expanded branch network and launch of new lines of businesses. The efficiency ratio (cost to income) at 25.2% in 2006 as compared to 28.1% in 2004, was well contained reflecting control over operating expenses whilst sensibly investing in the infrastructure and human capital.
What have been the highlights of its growth?
In 2005, UNB effected a 25% Rights Issue which attracted an overwhelming response and resulted in an oversubscription of 173 million additional shares.
In July 2005, UNB established a Euro Medium Term Note program of US $1.5 billion, with the size program since being increased to US $3 billion in 2007.
As mentioned earlier, in support of our aspiration to be "a key player in the region," UNB acquired a majority stake in ACMB, in the third quarter of 2006.
A strategic alliance was formed between UNB and IndusInd Bank (IBL), India, encompassing a wide range of banking services, including deposit accounts, remittance business, loans and wealth management advisory.
UNB's consistently superior performance, sound asset quality and strong financials overall was recognized by the world's leading rating agencies upgrading UNB's ratings.
In December 2006, UNB signed US $1 billion Syndicated Term Loan Facility. Strong support came from regional and international banks with 35 banks including the six Mandated Lead Arrangers participating in the facility. The Syndication was done at a margin of 27.5 bps over 3 months US $ Libor which represented the most competitive margin for a five-year tenor then achieved by a financial institution in the GCC.
The Bank was recertified, in 2005, as being fully compliant with ISO 9001:2000 standards. UNB was the first bank of its size in the Middle East to be certified for all its functions, operating units and branches back in 2002.
UNB's commitment towards maintaining the highest standards of quality in all its processes and services quality excellence was confirmed when the Bank won the Sheikh Khalifa Excellence Award (SKEA) - Gold category for the Financial Services industry and the Dubai Quality Award (DQA).
Forbes Arabia, the Dubai based edition of the world renowned business and financial magazine Forbes, ranked UNB as the number one bank in the UAE, and 23rd in the overall top 50 list in the Arab world, in terms of performance.
What are the prospects for the future?
The Bank's primary aim is to achieve steady, continuous, sustainable growth in aggregate terms through the contribution from all its existing business lines.
The Bank is also focusing on a number of new opportunities, such as Islamic finance, privatbanking and select overseas expansion. These are seen as opportunities for diversifying income streams, and are only expected to add to the bottom-line over the medium term.
What market share does UNB have in the UAE market, and how do its international ratings compare with other banks in the market?
The Bank has 5.2% of gross loans and 5.6% of customer deposits, of the domestic (UAE) banking market as at 31 December 2006.
Two of the leading external rating agencies, Capital Intelligence (CI) and Fitch Ratings upgraded the Bank's ratings in the first half of 2007. CI raised the financial strength rating of the Bank to A+, from A, whilst reaffirming the foreign currency ratings at A+ long-term and A1 short-term. Recently, Fitch Ratings upgraded the Long-term foreign currency IDR of the Bank to 'A+' from 'A'. Moody's ratings for the Bank are: L/T A1, S/T Prime -1.
All ratings have a "Stable" outlook.
In the mission and vision statements it is mentioned that the Bank aspires to be a key player in the region. Can you describe what strategies you are implementing to achieve this goal? What plans does UNB have to expand in the region?
Firstly, let me clarify that by 'the region' we are referring not only to the GCC, but also to the broader MENA countries, and to countries in Asia, such as China that simply cannot be ignored because of their economic and commercial promise.
Our approach for entry into these target markets cannot be uniform and must be tailored to suit the specific characteristics of each market type. For example, we acquired a modest sized bank in Egypt in the second half of 2006 as a means of entry into the Egyptian market. We are currently in the process of restructuring the bank, opening new branches, introducing new products and services, etc. At the same time, we are also seeking regulatory approvals for establishing our Bank's branch network in other GCC countries, being our cultural neighbours and fellow members in the regional trading bloc.
As I said earlier, there are a number of countries within the broader MENA that we have identified as target markets, given their population sizes, economic and banking sector reform movements and improved regulatory and legal environments. Here, we may deploy a mix of acquiring and securing licenses, depending on the strategic choices available in any given circumstance.
As we are all aware, the roles of countries like China and India in fuelling world economic growth and redefining trade and investment flows cannot be isolated from a commercial bank's strategy. As such, we are also keen to establish a presence in some of these countries through a combination of strategic alliances, representative offices and branches.
Customer satisfaction plays a key part in the vision statement of the Bank, what strategies is UNB implementing to help it achieve its goals in this respect?
Customer Satisfaction is an important ingredient of UNB's vision and is embedded in UNB's plan to excel in customer satisfaction. UNB conducts extensive research exercises to measure and enhance customer satisfaction. External customer satisfaction surveys, internal customer satisfaction surveys, benchmarking surveys and mystery shopping surveys are carried out regularly to help achieve our Vision.
Recently a benchmarking survey by a leading independent market research company revealed that UNB is rated as one of the leading banks in terms of customer satisfaction. UNB was rated as one of the leading banks in terms of 'fulfilling customer commitments' and 'transparency' and received a high overall satisfaction rating. The survey also showed that UNB is considered to be very strong on customer care, the single most important element to individuals today, and that staff are rated highly on their responsiveness to customer enquiries, friendliness and professionalism.
What steps is the Bank taking to introduce anti-money laundering measures and improve the transparency of its business to shareholders?
Our compliance program represents a commitment to maintain the highest possible standard of compliance with all applicable external laws, internal rules and regulations. Our antimoney laundering measures adopt international best practices. 'Know Your Customer' is a fundamental principle in all our customer relationships. We have an independent compliancfunction under the risk management umbrella to protect the Bank against money laundering risks. The recent development in the areas of Basel II and corporate governance, across the region in general, UAE in particular, shall automatically improve the transparency and disclosures and we are well prepared in this respect.
What prestigious awards has UNB won in recent years?
Union National Bank was rated number one bank in the UAE in terms of performance and number 23 among the 50 best performing companies in the Arab world by Forbes.
UNB has been on a continuous journey towards excellence to create a strong culture of continual performance improvement and to provide consistently superior services to its customers. As an acknowledgement of its efforts, UNB has been awarded major accolades and quality certifications including:
- In 2002 UNB became the first bank of its size in the region to be certified the ISO 9001:2000 for all its operations and branches in the UAE and it was also subsequently re-certified in 2005.
- In 2002 UNB won the Sheikh Khalifa Excellence Award (SKEA) in the financial category.
- In May 2005 UNB won the coveted SKEA Gold award, one of the highest and prestigious awards of excellence in the region.
- In December 2005 UNB was recognised by the Institute of Internal Auditors USA and received the ROC (Recognition of Commitment) award. The award is the uppermost recognition for an internal audit function, confirming the Bank's commitment to adhere to the highest quality standards.
- In March 2006, the Bank received yet another honor when it was awarded with the Dubai Quality Award ( DQA)
All of this along with the recent upgrade of UNB's foreign currency long term rating to A+ from A, by Capital Intelligence, is another reflection of the bank's robust performance and expansion. Jumping a massive 303 places in The Banker magazine's annual global bank rankings - from 641st place in 2006 to 338th in 2007 - UNB has been officially recognised by this leading international publication as not only the fastest growing bank in the region but one of the fastest growing in the world.
Can you describe how CSR (Corporate Social Responsibility) is part of the strategy of the Bank, and what CSR activities is the Bank undertaking?
As a responsible corporate citizen, UNB plays an active role in supporting the development of the local and international community by sponsoring various events in different categories such as sports, education and the environment. One of the main sponsorships UNB has supported in the education field in 2007 was "Education Without Borders" which is a biennial international student conference that creates networks across cultures in order to understand and generate solutions for some of the world's greatest challenges. The conference engages the world's most innovative students and leaders of Business, Technology, Education and the Humanitarian sector in a collaborative forum that culminates in a commitment to action.
As the Bank that cares, UNB has also sponsored the "At Home" campaign organised by the Red Crescent. The motive of the campaign is to emphasize that charity begins at home and it was based on three solid foundations: Construction, Support & care.
In addition UNB also sponsored the "Pleasing Hearts" program organized by the UAE University which works on building houses for various families in the UAE.