How badly has the wider economic downturn hit the National Bank of Fujairah (NBF) in recent years and isthe worst now over?

Despite the underperforming investment and loan portfolios, which resulted in NBF reporting a loss for the financial year of 2008, the bank quickly returned to profitable operations in 2009.

In 2009, NBF recorded a profit of AED104.3m ($28.4m) compared with a loss of AED50m for 2008. These results show a relatively quick recovery and reflect the strength of NBF’s underlying core business, liquidity and capital adequacy positions and the confidence placed in the bank by its customers and shareholders. This recovery has continued in 2010.

Do you have any plans to expand the network of branches around the UAE further, or to reduce it?

NBF is constantly upgrading its efforts to cater to the needs of its customers in the UAE, and has undertaken a series of renovations throughout its 12-branch network. For example NBF’s 12,000 square foot flagship branch in Fujairah was renovated and re-launched on 12 July. We do plan to further expand the bank’s branch network, details of which will be announced at a later date.

Provisions will always be a feature in this business but we have been very conservative in our approach

How hard has it been to compete for business?

Being the national bank of the emirate, NBF has a strong and strategic presence in Fujairah in terms of our historical relationship and extensive branch network. Competition has certainly increased but this will help ensure we stay responsive to the market. 

Are there any plans for the bank to expand beyond the UAE?

No, we believe there are sufficient opportunities for a bank of our size in the UAE. 

Is there any more cost-cutting to come?

The bank’s long-term strategy is to grow prudently and efficiently by focusing on its core strengths in corporate and commercial banking and trade finance. Along those lines, NBF does not cut costs as an end in itself, but to achieve the right balance in the bank’s resources and this remains an ongoing discipline.

How long will it take for NBF to return to the profit levels it was posting in 2007, before the economicdownturn began?

As a listed company, we avoid making such informal financial projections. Challenging conditions notwithstanding, we are well-positioned for more stable growth and are optimistic of our ability to further build on our solid set of results achieved over the past year.

Will corporate banking remain the mainstay of the business, or will retail banking ever become thedominate area of activity for NBF?

As a full-service bank with a strong track record of servicing the business communities in Fujairah and the UAE, NBF will continue to focus on what it does best, which is corporate and commercial banking with a broader retail proposition in Fujairah.

There is a lot to be achieved in the business banking arena and NBF’s focus now is to grow its share of the business. Our treasury product offerings have seen success in recent years and we aspire to take that to the next level.

NBF also continues to be a significant player in precious metals and trade finance and will continue to enhance its offerings in these areas.

Has the bulk of the provisions for bad debts been made now, or do you anticipate having to make furtherprovisions in the quarters and years ahead?

Provisions will always be a feature in this business but we have been very conservative in our approach and do believe that the high levels [in this cycle] will start to recede.

(As told by a company spokesman)