How would you describe AUB Kuwait’s performance in 2018? And what are your focus areas this year?
The team and I were extremely proud of the performance in 2018. We delivered disciplined and sustainable growth in our core business areas, whilst also working on initiatives around improving the customer experience and our end to end processes.
From a financial perspective, we delivered growth in our net profit of 15.3 per cent (from KWD 44.5 million in 2017 to KWD 51.3 million in 2018). This growth was delivered through above industry growth in our corporate lending book, whilst keeping a strong discipline on credit standards and our cost base.
The results were further supported with greater contributions from our retail and treasury lines of business. The return on average equity (ROAE) and return on average assets (ROAA) of 14.2 per cent and 1.4 per cent respectively continue to be amongst the best returns in the market. More important than the numbers, was the impact we had on supporting our customers with their ambitions.
During the year we supported businesses with their financing needs ranging from Kuwait’s oil exports (through purchasing additional tankers), to enhancing the domestic public transport infrastructure. We enhanced our retail products by adding life insurance to financing solutions to better protect our customers.
These are several examples of how we are positively impacting the community we are part of. Our investment in technology continued. This covers improving our IT architecture and constantly addressing cybercrime risks, to initiatives to improve our mobile application and internet banking.
As an example, Ahli United Bank is presently the only bank in Kuwait that offers an advanced cash management solution (B2B) to customers on a mobile app. In addition, we added enhancements to our retail mobile app that allows greater functionality and user experience. Internally, we adopted various technologies to reengineer a number of our core processes including payments and account opening.
A key landmark was the opening of our ‘concept’ branch in Avenues phase four. The branch provides digital tools that will continue to evolve over the coming months. When we see solutions working in this branch, such as video banking, we will consider extending them to other locations.
We have more initiatives in our pipeline that should make 2019 another exciting year. In addition to the all the above initiatives a key part of our responsibilities is to ensure we keep a strong culture of governance and robust controls over our business. We continued to strengthen areas around our data management, broader IT security, liquidity ratios which all benefited from stronger engagement with our regulator and other stakeholders.
AUB is headquartered in Bahrain but has presence in most Middle East markets including Iraq and the UK. Can you explain the dynamics of this network?
What makes AUB a special place for both customers and staff is that footprint in key regional markets, and in the United Kingdom. When we look at the growing trade and investment flows across these key markets, it puts AUB in a unique position to support customers across these geographies.
In terms of specifics, AUB Group’s has wholly owned operations of AUB (Bahrain) and AUB (United Kingdom), AUB Group has an 85.4 per cent stake in AUB (Egypt), a 74.9 per cent stake in AUB (Kuwait), a 68.9 per cent stake in Commercial Bank of Iraq, a 40 percent stake in United Bank of Commerce & Investment (Libya) and a 35 per cent stake in Ahli Bank (Oman).
AUB Group also has Al Hilal Insurance, which offers conventional and Islamic insurance solutions. What this means in practise is we can support customers with their needs in multiple markets across a range of relevant products.
For example, Ahli United Bank Kuwait has a corporate customer investing in Bahrain. Our colleagues in Bahrain are the perfect team to support this corporate. Or a Kuwaiti customer is looking to purchase a property in London as an investment or as a family base. Again, our colleagues in London have a range of solutions that could support them.
There are not many this region that operate in this manner.region, that operate in this manner.
It’s an acknowledged fact that the GCC is over-banked—hence the wave of consolidations over the last three years. What are your views on this?
Some markets in the GCC are more overbanked than others, and there clearly is a growing trend of M&A in the industry. As with any industry, the benefits and risks of a merger applies. The assessment is greater than the discussion of scale or cost benefits.
Similarly, aspects such as cultural integration and market positioning will need to be considered to get the most out of any two businesses combining. If you look back in history, many markets witnessed waves of consolidation in the Banking sector. At the same time, smaller players can still thrive and do well.
Having taken over the reign this year, how do you plan to navigate persisting challenging conditions?
It is a tremendous honour being part of the team that run the oldest operating bank in Kuwait. Our history is unique, and the contribution to supporting the prosperity and ambitions of the community in Kuwait is second to none. As part of this Ahli United Bank has managed to reinvent itself a number of times to ensure it stays relevant to the market in Kuwait.
The last significant re-invention was when the Bank converted from conventional to Islamic in 2010. We are presently going through a digital reinvention, where we looking at all aspects of our business and seeing how we can leverage technology to improve. Some tools are internal, such as collaboration platforms.
Some tools are external, such as giving customers more insights on their finances so they can make better decisions. We have a team that has an exciting mix of long serving experienced bankers combined with youthful energy and creativity. Their passion every day to drive improvements and deliver to the customers creates a good learning and evolving environment.
We have regular informal and formal discussions, and through this we are navigating to an exciting future ahead.
How big is AUB’s private banking business in Kuwait? Do you have any expansion plans on this?
Private Banking is a key line of business. It has grown well in recent years, with more customers doing more business with us. This ranges from discussing their wealth needs or seeking financial support for a project they are working on.
We are adding to this team, as we do see this sector growing in a sustainable manner. Our history, trust and delivery is a key differentiator.
The Kuwaiti government undergoing economic transformation agenda. How does AUB’s future plans fit into this?
Since 1947, we have played a role in developing Kuwait’s economy. This contribution continues and is growing. Our Corporate & Treasury teams are closely engaged with Ministries, the private sector and other agencies to ensure we remain actively engaged.
We also review how this impacts the retail sector, and position ourselves appropriately. For example, we see a growing need for leasehold property in Kuwait for the industry sector. As a result, we developed a tailored financial structure that supports our customers how have needs in this area.
With so many risks and challenges facing GCC economies at the moment, what are your projections on the banking sector in Kuwait?
Following an active strategy and engagement by the Central Bank, the Kuwait banking sector is in a very strong position. This has also been highlighted by the rating agencies and organisations such as the World Bank.
The stability of the currency, strengthened liquidity and improved nonperforming loan ratios are key success measures. However, for me, the key source of optimism is the quality of the talent available in Kuwait. Some of the current leaders in the industry and the younger leaders coming up, are truly world class.
The training and development opportunities available are excellent. In terms of future growth, Kuwait still enjoys a healthy expansion in real estate prices, whether commercial or residential and the commercial sector was the scene of a big improvement in activity and sales in 2018.
Consumer spending also remains strong in Kuwait and debt/GDP level amongst the lowest in the region. We believe the pace of fiscal consolidation is set to slow in 2019, and non-oil growth is expected to increase.
Growth prospects in the medium-term will depend on the success of diversification efforts and improving areas such as the ‘ease of doing business’. Overall, the Banking sector will remain strong and support the economy. It’s overall growth, as with any geography, will depend on the rest of the economy.
Having worked in various markets and organisations over the last 24 years, what is your current approach in leading AUB Kuwait into a more profitable trajectory?
Having worked in over 10 geographies in my career with three world class banks (HSBC, ANZ and AUB) I am really fortunate to have had the experiences that I have had. The team at AUB Kuwait are determined to deliver growth, through supporting individuals, companies and the broader community with their ambitions.
My role is to make sure the team are empowered with the right tools to deliver this. We are working through a number of initiatives which includes improving our customer experiences through the mobile, ATM, call centre and branch.
At the same time, we are using technology to improve our operational back bone and operate in a more agile manner. A key part to this is also organising our data so we can make better informed decisions. It is an exciting time to be part of Ahli United Bank. With what the team are working on, we can expect our growth to continue.