An increased focus on financing small and medium-sized businesses should be another important step towards unleashing the Middle East’s vast untapped reserves of entrepreneurialism. Although rarely easy for risk-conscious lenders, growing the SME book is vital for the region’s future as a banking market. It is something notably lacking in the most oil-dependent economies.
In the UAE, on the other hand, some banks have given a good demonstration of what not to do in SME banking. Market leader ADCB’s growth in SMEs has not been an unconsidered dash for higher yields, as its transaction services franchise shows, although the consensus among analysts is that it too has been caught up in the lending frenzy. It will be interesting to see how this part of ADCB evolves as the market stabilizes.
In Egypt, Bank of Alexandria is working proactively to develop its place in an SME market of huge challenges and opportunity. It was a year of strong growth for its SME loan book in 2016, in part thanks to drastically reduced loan processing periods, now down sometimes to only three days.
Also known as AlexBank, its SME product factory is busy, whether it is export and inventory finance or longer-term credit linked to machinery and vehicle fleets.