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ADCB to stay away from world markets

Bulk of provisions was against international exposure. UAE banking sector has shown outstanding resilience. (EB FILE)

By Nadim Kawach

Abu Dhabi Commercial Bank (ADCB), one of the largest Gulf banks, said yesterday it would avoid investment in global markets after reporting losses in 2009 because of massive bad-debt provisioning.

Alaa Eraiqat, CEO of ADCB, described 2009 as a year of provisioning for the government-controlled bank, but sounded cautiously optimistic about 2010. In an interview with Emirates Business, he said the bulk of provisions allocated by the bank were against its international exposure, adding that such a move was part of ADCB's conservative strategy.

"Our areas of focus remain our areas of strength, hence consumer banking and SMEs are at the centre of it all. Also we continue our involvement with the public sector and its infrastructure projects. What we will not do is to be involved in overseas investments or loans," he said.

"It is indeed the year of provisioning," he said of 2009, when ADCB reported a net loss of about Dh513 million mainly because of higher provisions.

"We took Dh3.86 billion of provisions, resulting in a net loss at the bottom line level. These provisions are mainly (Dh2.2bn) to address our legacy international exposure. The remaining is to bring our provisioning levels to appropriately prudent levels for a bank of our size."

Eraiqat said ADCB was now in a strong position after the provision build-up, adding that its capital adequacy was as high as 17.5 per cent. While voicing optimism about 2010, he said the year would not be free of challenges and the bank should be prepared for the worst.

"Every new financial year comes with its own challenges. We cannot let our guard down and should be prepared for the worst, but wish for the best," he said. "It is too early to judge given the number of variables at play in the market, but I am optimistic about the market as a whole."

Eraiqat said the UAE banking sector, the largest in the Arab world, had shown outstanding resilience to the global financial crisis. He also lauded government measures to support the sector.


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