Annual Report - Ahli United Bank

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Annual Report - Ahli United Bank

With clients operating in a particularly demanding trading environment, Corporate Banking moved to strengthen relationships providingthe highest levels of service and integrity. Appropriate and prudent measures were pursued in reducing risk and selective repricing of theexisting portfolio, coupled with enhanced monitoring. Managing costs and corporate liabilities were among key priorities whilst businessstrategies renewed focus on SME customers, sovereign and quasi sovereign transactions and on cross-border clients in selective industriesacross the AUB Group locations. Commercial banking continued to take a lead role in revenue generation across the Group.In 2010, with the health of the real economy expected to remain uncertain, Corporate Banking will work closely with those customers inselected industries essential to the core of the real economy, focusing on providing financial solutions engineered to meet their individualbusiness requirements. Vigilance and careful monitoring of account management remains imperative in maintaining the quality of thelending portfolio whilst growth strategies to generate cross-border business will focus on implementing quick turnaround with a focusedapproach for different markets.TREASURY2009 was another year of unprecedented challenges. With the credit crisis shifting away from the banking sector into the corporate sector,banks were required to make significant provisions for non performing loans. As the world sought to emerge from the severe economicrecession, central bank policies focused on easing liquidity and maintaining historic low levels of interest rates.Treasury continued to broaden AUB’s liability base and further reduced dependence on wholesale funding. Proactive and cost effectivemanagement of the liability base enabled the Group to maintain high liquidity levels throughout the year, meeting all of its financialobligations while being a net provider of funds to the wholesale money markets.In challenging market conditions, our client-oriented focus proved to be a key driver in generating revenue. With continued growthrecorded in foreign exchange sales, AUB was recognized as the ‘Best Foreign Exchange Bank in the Middle East’ by a leading global financialjournal for the fourth successive year. We continued to source new products in order to enhance customers’ return on deposits and reducerisk on their loan portfolios.Following significant changes in the global market place over the past two years, 2010 is expected to set global growth on an upward pathwith markets adjusting to the removal of the liquidity measures provided by central banks during the financial crisis.With the onset of a broader market recovery, the Bank will adopt a more dynamic approach, further strengthening our client focus andbroadening our range of product offerings for both risk and asset management. The Group’s extensive regional presence will continue tobe leveraged in enabling Treasury to provide one stop solutions for portfolio management.COMMERCIAL PROPERTY FINANCEReal estate markets declined sharply at the start of the year but subsequently stabilised with indications of recovery particularly evidentin good quality letting property.Close contact with borrowers was critical in monitoring signs of weakness in the portfolio which was revalued and restructured whererequired to reduce the risk profile and improve returns. As a result of successful restructurings and growth in new business, fee incomeand NIM were significantly above budget.Recent falls in UK property values, low interest rates, Sterling weakness and greater availability combined with reduced levels of competitionprovide favourable market conditions for Gulf investors in UK property in the coming year. In addition to presenting selected opportunitiesto the Bank’s client base, AUBUK offers support through debt financing on both a conventional and Sharia’a compliant basis.Going forward, while selectively seeking new business and maintaining portfolio quality, an opportunistic approach will seek to identifydistressed sellers of property where finance on a profit share or joint venture basis can be provided to deliver superior returns.AUB Annual Report 200933

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