Q&A: First Gulf Bank’s CEO talks restructuring, profit growth

First Gulf Bank (FGB), the largest lender by market value in the United Arab Emirates, is aiming to maintain profit growth at 6 percent this year. FGB's chief executive André Sayegh speaks to Argaam about the bank's outlook for 2016 and overall progress made on its restructuring plan.

Q:  What business segments do you expect to support the bank's profit growth forecast for 2016?

A: We are expecting positive growth in earnings, in the single digits, and anticipate that net interest margin levels in 2016 will improve. FGB’s resilient and diversified business model is positioning us well to capture future opportunities domestically and internationally. There will be a continued focus on enhancing core capabilities and on maximizing synergies between the three core businesses: Wholesale & International Banking Group, Consumer Banking Group and Treasury & Global Markets Group.

Q: Can you elaborate on the progress FGB achieved with its restructuring plan?

A: In 2013, we restructured our operations, focusing on three core pillars (Wholesale & International Banking, Consumer Banking and Treasury & Global Markets). Since then we have been making great strides in each of the respective business groups. We do not have specific timelines for goals, as the restructuring served to reshape the way we carry out operations, and is a long-term strategy. It has also supported our goals in expanding our operations across different groups, thereby increasing synergies bank-wide.

Q: What have been the biggest challenges facing the UAE banking sector over the last year?

A: Although global economic conditions appear to be challenging in 2016, it is a market reality that the UAE has always overcome downturns, and re-emerged with a stronger momentum. Moreover, the UAE enjoys a developed banking sector composed of a mix of local and international banks which facilitate business activities.

At FGB, our focus on efficiency will enable us to continue to provide superior and innovative products and services, both to the Public and Private sectors, at Corporate and Individual levels, and across our core businesses domestically and internationally. In this macroeconomic environment, our conservative risk management approach and strategic focus on revenue diversification and cross-business synergies ensures we are well-placed for long term growth. 

Q: What is your outlook for the UAE banking sector, corporate, and SME lending this year?

A: With a regulatory framework aligned with international standards, the UAE banking sector fundamentals are particularly solid in terms of Capital Adequacy, liquidity and asset quality, placing the industry in a strong position to support economic growth. Furthermore, the sector is quite advanced, always pushing the boundaries of innovation in areas such as product enhancement and digital banking.

SMEs have and will continue to be a vital part of our economy, and they will be a target segment for all banks. This is particularly true now that The UAE Banking Federation (UBF) revealed a plan earlier this month to support SMEs, in case they need to restructure their repayments.

Q: Are there any plans to tap the debt market this year to raise additional funds?

A: Given the current economic outlook we are anticipating a modest growth in assets which may reduce our funding requirements from previous years. The bank has a solid rating from the three international rating agencies, which provides easy access to the capital markets in due course of normal business activities. 

Write to Joumana Saad at joumana.saad@argaamplus.com