UAE banks cut jobs, shut branches and look for investors

By BLOOMBERG

ABU Dhabi Islamic Bank PJSC (ADIB) is seeking to save about 500 million dirhams (RM563.78 million) by cutting jobs and closing branches as sluggish economic growth weighs on the finance industry.

The state-controlled lender plans to shut some local and international branches, according to people with knowledge of the matter who asked not to be identified because the matter is private.

The bank has operations in Egypt, Iraq, Saudi Arabia and the UK. A spokesman for the bank declined to comment.

ADIB, as the bank is known, posted a 4% increase in profit, beating estimates, helped by higher revenue across its core businesses last week.

Revenue growth has been complemented by “our discipline in managing costs which saw the cost-to-income ratio decrease by almost 1% for the year,” group CEO Mazin Manna said in a statement.

ADIB joins competitors such as First Abu Dhabi Bank PJSC and Emirates NBD PJSC in cutting jobs. The United Arab Emirates (UAE) economy is coming under pressure from regional geopolitical tensions and weak domestic demand.

In Dubai, business growth stalled, while jobs disappeared at the fastest pace in at least a decade in the latest sign of strain on the Middle East’s commercial hub.

Consolidation between some of the country’s biggest lenders has also led to thousands of job losses.

Abu Dhabi, home to 6% of global oil reserves, has stepped up efforts to create leaner and more competitive financial institutions.

Meanwhile, Dubai Islamic Bank PJSC plans to boost foreign ownership in its shares as the UAE’s biggest Shariah-compliant lender joins rivals in courting international investors. The board recommended increasing the limit to 40% from 25%, according to a statement.

The proposal was driven by “strong investor demand” and because the stock is the “most liquid” within the sector. It has the “least available room in foreign ownership limit (FOL)” among its peers, the bank said.

First Abu Dhabi Bank in July proposed removing a cap on the FOL in its shares after the UAE started easing rules to attract investors. Emirates NBD PJSC raised the cap to 20% from 5% last year and will seek approval to double the new limit.

ADIB is also seeking to raise the cap to 40%. Dubai Islamic Bank, which acquired smaller rival Noor Bank PJSC last year, last Wednesday reported full-year profit that beat estimates. — Bloomberg