FGB to expand into new foreign markets

First Gulf Bank (FGB) will expand into three or four new foreign markets in 2014, seeking to push the percentage of its profit contributed by international operations into double digits, its chief executive said on Thursday.

The second-largest lender in the United Arab Emirates by market value expects to obtain banking licences in China and South Korea. It is also considering expanding into Indonesia and London.

The bank's overseas business, in Qatar, Singapore, Hong Kong, India and Libya, currently contributes about 7 percent of profits.

"We love Asia, there is trade flow and business, a large number of flights between Asia and the UAE," Andre Sayegh said in an interview.

"We expect our profit from international (business) to grow to the early teens" in the short-term, he said.

FGB posted third-quarter net profit of Dh1.19 billion ($324 million), up 13 percent from a year earlier and in line with analyst forecasts.

Double-digit profit growth is sustainable on a quarterly basis and will be driven by the bank's strong balance sheet, Sayegh said. "The bank has Dh180 billion in assets - you can command a certain level of profitability by managing the balance sheet line by line."

Credit growth will also continue growing at double-digit rates on the back of an economic recovery in the UAE and with more business projects being launched, he said.

The UAE is investing billions of dollars in industry, tourism, infrastructure and real estate in an effort to diversify its economy away from oil.

"The credit growth will carry on, because all of these projects will not be 100 percent financed. It's a combination of equity and debt."

"GDP is growing at a rate of 4 percent. The banking sector and economy drive each other. We have the ingredients for the economy to become more diversified."

FGB's loan book grew 10.7 percent to Dh126.9 billion at the end of September, versus the end of 2012.

In September, Sayegh told Reuters that the bank might bid for the retail banking business of Barclays in the UAE.

The Barclays sale process is still underway, he said on Thursday without elaborating. "Any acquisitions have to complement what we do. If they match, we will look."

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