More banks in the UAE are joining the SME lending bandwagon to expand their market share of the country’s financing segment.
The latest to announce its initiative is Noor Islamic Bank, which is seeking to extend Dh5 billion loan to small and medium enterprises (SMEs) over the next five years.
The bank announced yesterday the launch of Noor Trade, an SME-focused, Sharia-compliant banking service, and the opening of its first dedicated branch in Almas Tower, which is also houses the offices of Dubai Multi Commodities Centre, in Jumeirah Lake Towers to cater to the needs of small businesses in the country. The bank said it is set to open a similar outlet in Deira about two months from now.
The announcement came about a week after Doha Bank made public its commitment to earmark this year some Dh5.5 billion for lending to corporate and SMEs in the UAE.
Banks noted that there is an entrepreneurial upswing in the SME sector, with loans uptake and business expansion plans rising recently. In the first quarter of 2013 alone, at least 26,000 commercial licenses were renewed and a little over 4,000 new business applications were filed in Dubai.
“There is indeed an upswing in the loan uptake in the UAE. Last year, the UAE economy has grown by 4 per cent approximately and hence SMEs are also growing for which they require support in terms of working capital,” Rohit Garg, head of business banking at Mashreq told Gulf News earlier. The bank has recently upgraded its SME offering to increase loan amounts up to Dh1.5 million and include companies that are only two years in the business.
Hussain Al Qemzi, CEO of Noor Islamic Bank, said they are seeing significant growth in the small business community, as the local economy continues to strengthen and SME’s appetite for risk increases.
Through its Noor Trade initiative, the bank will provide SMEs access to financial services that are “fully Sharia compliant”, including cash management, trade, and working capital solutions, as well as consumer, treasury and takaful products.
According to Emirates Money, the subsidiary and consumer finance arm of Emirates NBD Group, the SME sector offers a huge opportunity for financing institutions and banks, considering that almost 50,000 UAE-based SMEs were on the lookout for additional financing as of last year. Emirates NBD has recently launched a privilege programme called “Rewards and Beyond” to provide SMES with a suite of products, benefits and solutions.