(MENAFN- Gulf Times) Mashreqbank, Dubai's third-largest lender, has increased revenue at its consumer unit by about 25% this year as it attracts more wealthy customers and owners of small and medium-sized businesses.
Higher income from fee-generating divisions like foreign exchange and bancassurance have added to improved growth at the wealth management and SME banking units, said Farhad Irani, head of retail banking at Mashreq. That's countering a slowdown in traditional income drivers for the bank such as mortgages and credit cards. Mortgage lending is "flat lining," consumer borrowing has slowed and margins have fallen, Irani said.
"The business is changing," Irani said on Sunday in an interview in Dubai. "Our top line is growing 25% year-on-year and our bottom line is growing 15% year-on-year in the first four months, which is great. But the lending side of the business has slowed considerably and margins are falling there."
Retail banking is the second-largest contributor to Mashreq's revenue, making up about 19%, according to data compiled by Bloomberg. The value of mortgage deals in Dubai fell 2% in the first four months of the year, according to data from the Emirate's land department.
Banks in the UAE have been focusing on growing their retail deposits as a lower-cost source of funding to protect margins while rates earned on loans to companies fall. Mashreq, owned by the billionaire Al-Ghurair family, on April 19 reported a 13% jump in first-quarter profit to 651mn dirhams ($177mn).
"The traditional businesses that were the mainstay of the retail bank are now showing more maturity," said Irani. "What's doing better for the retail banks now is more sophisticated products like wealth management and SME banking."
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