Banks score own goal: 50,000 SMEs in UAE need a shot at funding
There is tremendous opportunity for banks and financing institutions as almost 50,000 UAE-based small and medium enterprises (SMEs) are on the lookout for additional capital and financing, according to a report. Emirates Money, a wholly owned subsidiary and consumer finance arm of leading UAE bank Emirates NBD Group, Emirates Money, which is celebrating its fourth anniversary this year, has dispensed almost Dh2.8 billion ($762.1 million) in loans (personal, SME and auto) since inception, to grow its loan book to Dh1.3 billion.
Between 80 to 85 percent of these loans constitute SME finance, underlining Emirates Money’s leading position in this industry segment. Emirates Money, which has a large percentage of the market share of the SME financing market, also offers an attractive range of commercial vehicle and equipment finance products.
According to a recent study by Dubai SME, a total of 230,000 mini firms are currently operational in the UAE, but only 140,000 of these are considered bankable, since the rest are too micro. Typically, half the ‘bankable’ SMEs turn to partners, new investors and non-professional sources like friends and family for additional access to capital, because they often find it challenging to access finance from banks and consumer finance companies, it stated. “The huge gap in meeting financing requirements has created an enormous untapped market of almost 50,000 SME organisations, that need access to finance for various reasons, including managing operations, expansion of the business or purchase of equipment and vehicles,” explained SuvoSarkar, the general manager (Retail Banking), Emirates NBD.
“Emirates Money aims to tap into this pool, to increase our market share of UAE’s SME financing segment by another 15 per cent by the end of 2012,” he added. Speaking on the sidelines of anniversary celebrations, Vikas Thapar, the general manager of Emirates Money said the company had grown its SME- financing loan book by reducing the risk of lending to small and medium enterprises through the use of various tools. These included score cards; predictive behaviour analytics, tweaking of lending policies to suit market conditions and pricing, he noted. “Commercial vehicle finance is another significant growth area for Emirates Money, and we have established a leading position in niche segments like commercial vehicles, buses and used cars,” Thapar stated.
“On an average, Dubai’s automobile market registers trade in about 20,000 vehicles per month, and more than 55 per cent of these vehicles need financing,” he added. Emirates Money has witnessed considerable growth in the last four years, expanding its distribution across the country with five branches in Dubai and one in Abu Dhabi to service its 20,000 customers.