Thursday, May 04, 2017
Standard Chartered Bank is witnessing strong growth in consumer banking business this year following a year of lacklustre growth in 2016, said Shehzad Hameed, head of retail clients, Standard Chartered UAE.
“We have seen strong growth in sales across retail product segments such as mortgages, cards business, personal loans and deposits. In some of the areas of the retail business we are witnessing high double-digit growth,” said Hameed.
The revival in retail banking business is largely driven by improvement in the non-oil sector of the economy. Although the overall economic conditions remain challenging compared to last year, he said there was visible improvement in the retail banking business. “Latest data show that transactions have increased significantly in the first quarter of this year,” Hameed said.
Retail banking sales growth is supported by improved card spends, decline in loan rejection rates and improved demand for mortgages. Although the establishment of the credit bureau resulted in a surge in loan rejection rates, the bank said its approval rates are back to normal.
Despite improving business volumes, Hameed said retail banking business will continue to face margin squeeze across products due to relatively high level of liquidity and competition among banks driving down yields.
Mortgage is an area where bank is expecting to see significant growth in the UAE. Standard Chartered currently has six per cent market share of $30 billion (around Dh110 billion) mortgage market in the country. The bank said it is witnessing strong growth in mortgages, thanks to the decline in cash transactions.
“Cash transactions have come down from 75 per cent of the total transactions to about 50 per cent now, which means, the mortgage component has nearly doubled from 25 per cent previously to 50 per cent now,” he said.
As part of its efforts to gain greater market share, the bank has recently launched MortgageOne, a unique home loan solution for conventional and Islamic banking clients in the UAE. The MortgageOne account allows customers to combine their home loan borrowings and personal savings and transactions into one account.
The way it works is that clients pay interest only on the difference between the loan balance and the money held in the account. So if a client has higher amounts of cash in his/her account, the interest paid by the client on a mortgage will be lower than usual. What that means is that, every time clients pay their home loan instalment, they will be paying more towards the principal amount of the loan and less interest. This helps them pay off their loan balance much faster than a regular mortgage and at a lower interest cost.
“We have shifted from a product-based approach to being more client-focused. We have been developing propositions and services based on our clients’ needs rather than taking a one-size-fits-all approach. This has led to the introduction of MortgageOne in UAE,” Hameed said.
The bank lends up to Dh18 million in mortgages to customers depending on the existing regulations.
By Babu Das Augustine Banking Editor
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