Experienced, Self-Driven & Results Orientated

Abdul Aziz Al Ghurair, Chief Executive Officer of Mashreq Group

Interview with H.E. Abdul Aziz Al Ghurair, Chief Executive Officer of Mashreq Group.
by Lawrence J. Ireton.

Abdul Aziz Al Ghurair, Chief Executive Officer, Mashreq GroupLawrence J. Ireton: The Emirates’ banking sector overtook Saudi Arabia’s three years ago, having the highest deposit and credit level in the region. The UAE currently holds 31% of total assets across the GCC, a total of $455billion and 28% of its capital. UAE banks are the biggest lenders in the region, with around $281billion of credit, nearly a third of the total GCC credit. 2011 saw a healthy increase in banking performance in the UAE, the sector experiencing a 24% increase in profits in 2011, exceeding profit levels since 2005. Meanwhile bank revenues grew by 6%. Please give us your comments on the potential for continued growth in the UAE banking sector and to what extent do you think the UAE banking sector is prepared to confront current economic uncertainty, particularly given the Eurozone crisis.

Because of the Central Bank guidelines on retail services I see very little growth on the retail side unless the population increases. But the bulk of the growth will come in from the corporate side; there is more to come from the government and more to come from the infrastructure side. The UAE has redefined itself as the hub, the only place where business can be done. With all the Arab Spring issues in the neighborhood countries, I think the UAE stands out; therefore the growth of more business coming to the UAE will help us.

In the past, businesses focused on real estate and the equity markets, but now people are more sophisticated and they want to diversify their investment into other vehicles – bonds or international investments. In the past, because it was easy they were going direct, now I hope they learned that they are not the experts. Consumers with money would rather give it to Mashreq to manage than buying shares on his own. Of course, Islamic banking will grow. Banks within retail will also grow if they deliver a new product or a fantastic service.

The UAE banking sector has taken certain steps to ensure it’s not affected by external uncertain market conditions. For instance, the Central & the Government has continuously extended support to operating banks, be it National, regional or international. Today, the UAE has become a success story in all levels, whereby other countries learn from us and aspire to follow suit.

Lawrence J. Ireton: With 23 national banks and 28 foreign establishments, how would you describe the competitive environment of the UAE banking sector?

Competition is healthy and it is required in a country that has an ambition to grow. UAE offers an excellent platform, one that is diverse and flexible. This is definitely in the interest of customers, as they have a wide range of banks to choose from based on their preferences. Moreover, this is a testament and reflects UAE’s capabilities as a strong business hub in the region.

Having a competitive banking industry, will only persuade Banks to constantly develop products and services extended to retain customers and attract new ones. Today a customer has a wide choice to make between local and international banks, including Islamic and non-Islamic banks.

Because there are regulations that serve both banks and customers, we can anticipate more financial institutions coming to the UAE to setup business and start their journey in the Middle East to establish their Headquarters.

Lawrence J. Ireton: Mashreq Al Islami is the Islamic banking division of Mashreq and in a recent report by Ernst & Young it stated that in the GCC the Islamic banking market share had crossed the 25% threshold, a significant milestone. Please discuss to what extent you feel Islamic Banking will challenge conventional banking in the years to come (this region specifically)?

Islamic banking is always an option for customers who wish to go for Sharia’ah Complaint products – it’s an industry posed with balanced growth. Conventional banking has its customer base as well and is vastly growing.

Islamic banking and finance has crossed US$1.3 trillion mark last year and is expected to reach US$1.8 trillion by 2015.

In the past few decades, it has transformed from a marginal activity to a sizeable alternative financial management system.

There is a real potential for expansion in retail banking, investment banking and consumer finance, especially in this region.

By end of 2010, the total Islamic banking assets in MENA had reached $440 billion and are expected to reach US$990 billion by 2015 which means 20% growth per annum.

Lawrence J. Ireton: What do you feel has been the biggest factor in the growth in Islamic Banking, particularly among non-Muslim customers?

Attractive rates! Customers always look for better rates and choose them over others. Innovation in products has also played a big factor in the growth of this segment, simply because now you have Islamic propositions across the spectrum. In the past few years, we have seen most banks become more active through introducing Sharia’h Compliant products, which opened up market and achieved growth for the industry.

Lawrence J. Ireton: In 2011, the bank recorded a net Profit of AED 820 million ($218m) from total operating income of AED 3.9 billion ($1.2 billion) over the same period. Assets stand at AED 84.8 billion ($22 billion). What elements of your corporate strategy and governance have been most significant in allowing the bank to achieve these very healthy figures?

The financial results of 2011 reflect our policy of balancing prudence with profitability. One can’t deny that it was a rather challenging year for the region, but Mashreq continued to maintain high levels of capitalization and liquidity and remain fully committed to the markets across the GCC.

Our focus is to deliver sustainable financial results while adapting to rapidly changing market conditions by focusing on customer centricity across our businesses. Meeting and exceeding the needs of our customers is the corner stone of our business philosophy.

We continued to develop products based on customer requirements and have introduced innovative offerings to adapt to market conditions. I think that is one of the main reasons why Mashreq has always been a pioneer in the banking sector.

Lawrence J. Ireton: Having been in your position as CEO of Mashreq since 1990 and overseeing the growth of the company since then, please discuss your future projections for this financial institution.

Mashreq has a long history with innovation! That is something we will continue to develop and work on to continue offering superior products. To grow, we need to look at the level of service being offered; hence work has to start from within the organization. We have transformed our internal processes, which mean simplifying everything.

Our plans to further grow have never stopped, we continue to expand in countries we already have presence in and study other opportunities when suitable. Mashreq’s current customer-base is our main focus and retaining them is a priority. That includes enhanced services, convenient and seamless; this is a key differentiator from one bank to another.

With extensive network in UAE, we have 26 overseas offices in 11 countries spread across Europe, US, Asia and Africa providing a comprehensive range of financial services and products – we surely look forward to enhance our presence across the region.

BIOGRAPHY OF His Excellency Abdul Aziz Al Ghurair, Chief Executive Officer, Mashreq Group

His Excellency Abdul Aziz Al Ghurair is the CEO of Mashreq Group and the Chairman of Abdulla Al Ghurair Group, one of the biggest and most successful business groups in the UAE with a staff of up to 65,000 employees.

H.E. Abdul Aziz held various dignitary positions, which had its impact both regionally and internationally. He was elected as The Speaker of the United Arab Emirates Federal National Council (UAE Parliament) for tenure of four years, which ended in February 2011.

His Excellency’s current positions include; Vice Chairman of the higher board of Dubai International Financial Centre, Chairman of the Board of Directors of the Dubai International Financial Centre Authority, Chairman of Emirates Banks Association and he is on the Board of Emirates Foundation. He is also the Chairman of Masafi and Oman Insurance and Co-Chairman of the Arab Business Council – World Economic Forum (WEF).

Previously, he sat on the Board of Directors of major companies such as Emaar, Dubai Investments, Visa International, MasterCard, and Dubai Chamber of Commerce and Industry. He was also a member of the Constitutive Council for GCC Leaders and President of The Knowledge Fund.

H.E. earned an honours degree as an industrial engineer received his education from California Polytechnic State University and graduated as an industrial engineer with Honours Degree.

His endeavours have earned him many international accolades, such as
• Best CEO Award from CEO Middle East magazine 2008;
• Lifetime Achievement Award from The Arab Bankers Association of North America (ABANA) – USA in 2008;
• Best CEO Award for supporting Emiratisation initiative in UAE from the National Career Fair – Banking and Finance in 2008;
• Lifetime Achievement Award from Euromoney in 2008;
• Lifetime Achievement Award in 2009 and Best Banking Contributing Personality Award of 2011 – from both Banker ME; and the MEED Leadership Award 2011; and
• The Arab Banker of the Year in the Private Sector Award 2010-2011 from The Union of Arab Banks (UAB) in Rome, Italy.

His Excellency’s wise leadership has led Mashreq to become a leading financial institution and achieving several accolades, such as Best Trade Finance Provider Award in the UAE and Best Consumer Internet Bank Award from Global Finance magazine, Best Bank in the UAE from The Banker Awards, Most Progressive Bank in the UAE Award from Euromoney.

He played a pivotal role in providing substantial views to the UAE’s financial and banking industry and Arab countries to allocate suitable and appropriate solutions to confront the implications of the global financial crisis, which affected all sectors in the Region.