NBAD looks to emerging markets as it starts operations in India

NBAD says it will start its operations in India next month as lender ramps up emerging market business

Emerging markets are still strong fundamentally, according to Alex Thursby, chief executive of National Bank of Abu Dhabi. Mona Al Marzooqi / The National

National Bank of Abu Dhabi is starting operations in India next week as the country’s biggest lender by assets targets emerging markets to boost its growth.

The bank will open shop in India on November 3 with a focus on corporate clients, a year and a half after being granted a licence, the first for a UAE lender in the fast-growing South Asian nation in 34 years, Alex Thursby, the bank’s chief executive, said in an exclusive interview at the bank’s headquarters last week.

Emerging markets have been unloved by investors during the past couple of years amid economic and political turmoil in countries such as Russia and Brazil, collapsing commodity prices and relatively sluggish GDP growth in China, the world’s second-biggest economy, but Mr Thursby said he remained bullish.

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More from Alex Thursby

■ UAE banks may face tougher times. Read here

■ NBAD bangs the drum for SMEs. Read here

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“Emerging markets are still strong fundamentally, and I will say that emerging markets have been through this in the past and emerging market governments make the hard changes and that view, still strongly holds with me,” he said.

“People damn China at the moment, which I think is ridiculous,” Mr Thursby said. “If you actually understand what’s growing in China, you are seeing 10 per cent growth in services, you are seeing intellect industries growing at a rapid rate. Trade into India is growing. For every negative piece, there is a positive piece.”

India’s outlook was given a shot in the arm last year after Narendra Modi, the country’s reform-minded prime minister, took office. Mr Modi lost little time in his plans to overhaul the country’s economy, the third-biggest in Asia. As well as moving towards market-based energy pricing by removing energy subsidies, Mr Modi is also getting ready to pass a goods-and-services tax, to open up more to foreign investment as well as to better target subsidies for fertilizers, cooking gas and food towards those that need them most.

India is central to NBAD’s bigger plan as the bank has been betting that its growth in the coming years will be fuelled in part by what it calls the West-East corridor that spans fast-growing emerging markets such as China, India and Egypt.

Shortly after he was appointed as chief executive in 2013, Mr Thursby said that NBAD planned to build eight hubs in a West-East geographical corridor of emerging markets spanning cities such as Mumbai to tap an intercontinental trade flows valued at US$137 billion. He said that since then he has grown its international business with income coming from outside the bank’s operations in the UAE now accounting for more than 20 per cent of total revenue.

The push into new markets comes as the UAE’s economy begins to show signs of stress amid lower oil prices. Third-quarter earnings revealed losses at some lenders as some corporate customers found it more difficult to repay debt.

NBAD’s five-year plan includes setting up hubs in Lagos, Washington, Mumbai, Singapore, Hong Kong, London and Paris. The bank has also said that it wants to build retail banking networks in a select number of emerging markets including Egypt.

Mr Thursby is unperturbed by the flailing fortunes of emerging market debt amid the strengthening US dollar and concern that companies in the developing world will find it increasingly difficult to pay back loans and potentially default on bonds.

“Most of the companies that we service are very lowly geared in comparison,” he said “It’s about focusing on those specific customers and segments that you feel you can bank well and that are safe. Our strategy has always been to focus on the best corporations in those parts of the world.”