EDB Board highlight SME focus among H1 2018 achievements
The Emirates Development Bank (EDB) Board of Directors held its fourth meeting of 2018 on July 18th at the bank's headquarters in Dubai, chaired by His Excellency Obaid Humaid Al Tayer, Minister of State for Financial Affairs and Chairman of the EDB Board of Directors. During the meeting, the Board discussed various items on the agenda, made numerous decisions and approved both the financial statements and the 2017 annual report. Emirates Development Bank has achieved many operational and regulatory achievements during 2017, which will contribute to improving the financial performance and growth of the bank's loan portfolio in the coming years.
His Excellency Obaid Humaid Al Tayer, Minister of State for Financial Affairs and Chairman of the EDB Board of Directors, re-emphasized the bank’s significant achievements to date, such as the portfolio of Home Finance for UAE nationals reaching AED938 million for 1,012 Emiratis, which is expected to reach AED1.25 billion by the end of 2018. This compares to AED150 million at the end of 2016 and is seen as a result of the bank’s approved UAE Nationals Home Finance strategy which contributes to achieving the National Agenda in terms of the housing sector. The bank offers Home Finance for UAE nationals with competitive advantages and credit flexibility, which reduces the financial burden on Emiratis.
H.E. noted that the SME Financing products have achieved the anticipated success in terms of the number of companies that have received funding, with a total value of AED357 million during the first half of 2018 which is expected to reach AED500 million in 2018. SMEs are the main economic pillar in the UAE and are considered the engine for creating job opportunities, which promotes sustainable economic development in the country and strengthens its competitiveness both regionally and globally, accelerating the country’s transformation towards a knowledge-based economy, driven by creativity and innovation, in line with the National Agenda.
H.E. the Chairman of the Board of Directors reiterated the bank’s SME Financing strategy, which is based on the following:
1. Small and medium-sized enterprises financing (SMEs):
Emirates Development Bank aims to offer banking solutions to achieve sustainable financial development for enterprises. The bank offers financing to small and medium-sized enterprises up to AED30 million on favorable and deliberate risk-free terms, creating more job opportunities for Emiratis, moving towards a knowledge-based economy and supporting innovations, research and development.
2. Financing Programme for start-ups from AED2 million up to AED5 million:
The bank is planning to launch a financing programme for start-ups offering financing loans from AED2 million up to AED5 million for start-ups owned by UAE nationals (more than 51% ownership) in accordance with the bank’s terms and conditions. This programme will contribute to supporting Emiratis by providing them with the necessary credit to establish their companies and develop their businesses. The start-ups financing programme has competitive interest rates and a flexible repayment period
3. Issuing partial bank guarantees to finance SMEs owned by Emiratis (with more than 51% ownership):
EDB offers financing support to customers who wish to obtain funding through partial guarantees for commercial banks. The bank has launched a Credit Guarantee Scheme to finance SMEs. The programme provides financing of up to AED2 million for start-ups where the bank guarantees 85% of the value of the financing, and AED5 million for existing companies where the bank guarantees 70% of the financing value.
His Excellency highlighted that EDB is currently coordinating and communicating with the relevant parties to support SMEs, and launch a national programme that guarantees loans and offers support, financing and innovative banking solutions for these enterprises to achieve sustainable development in the sector. The SME sector is a mainstay of the economy, which positively reflects on both the national economy and the local productivity of the country. This contributes to the development and growth of SMEs through the provision of financing at an affordable cost and offering financing solutions to entrepreneurs and innovators who aspire to establish their businesses in the country.
H.E. added that since the launch of the Emirates Moveable Collateral Registry Corporation (EMCR), a wholly owned subsidiary of Emirates Development Bank, last April, approximately 21,000 mortgages were registered. The electronic system of the asset register uses more than 50 banks and operating companies in the UAE, and has more than 469 users. It is anticipated that the launch of EMCR’s operations will contribute to providing financing options for companies and projects, contribute to lower interest rates on loans, and provide the institutional framework and appropriate legislation for secured lending, increasing the UAE’s competitiveness, and enhancing its business environment.
His Excellency Al Tayer said, “Emirates Development Bank value the importance of strategic partnerships with the federal authorities supporting the UAE's relentless efforts to create a stimulating environment for innovation. Emirates Development Bank has signed a partnership agreement with the Mohammed bin Rashid Innovation Fund, launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister of the UAE and Ruler of Dubai. The strategic partnership aims to support entrepreneurs and promote sustainable growth in vital sectors. The main objective of this agreement is to provide government guarantees to motivate lenders to offer the necessary financing at low cost. More than 200 applications are expected to be considered per year.
H.E. the Minister concluded that the Board of Directors has recently approved the establishment of the Digital Platform to enable the bank’s digital transformation through the digitization of all the bank’s loans and internal procedures. This approach will allow the development of financing solutions and facilitates transactions that cater to customers’ needs. Emirates Development Bank is operating according to fast-paced technological advancement in the UAE, to maintain the highest levels of efficiency and professionalism of the bank’s cadres.
Emirates Development Bank was established under Federal Law by Decree No. 07 of 2011 issued by His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE. It became operational in June 2015 under the patronage of His Highness Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs. The bank launched its second branch in Dubai to provide comprehensive and easily accessible banking services to more UAE nationals, an important strategic step within the overall vision of the bank and in pursuit of its objectives to reach all customers throughout the United Arab Emirates.