UAE – Mubasher: Emirates Development Bank (EDB) has signed a memorandum of understanding (MoU) with Emirates Islamic Bank to collaborate on a joint credit guarantee scheme that will support the financial inclusion of small- and medium-sized enterprises (SMEs) across the UAE, according to a press release.
Under the partnership agreement, Emirates Development Bank will guarantee 50% of the finance facility extended to eligible SMEs by the listed lender, which is the 11th commercial bank to join EDB’s scheme platform that provides SMEs with financing solutions.
The two financial entities will also work together to identify additional opportunities to boost their banking solutions.
CEO of Emirates Development Bank, Ahmed Mohamed Al Naqbi, said: “EDB remains committed to enhancing our nation’s SME ecosystem and supporting the sustainable economic development of the nation, specifically the five key priority sectors.”
Al Naqbi added: “We are pleased to welcome Emirates Islamic to our expanding group of commercial bank partners with the shared goal of facilitating access to financing for SMEs contributing to the UAE’s non-oil [gross domestic product GDP].”
Emirates Development Bank plans to provide AED 30 billion in financing for the development of the UAE economy in five strategic sectors by 2026, including AED 5 million which will be allocated through credit guarantee schemes.
In 2022, Emirates Development Bank approved AED 6.10 billion in financing, which was 673% higher than the provision in 2021.
As for the SMEs segment, a total of AED 1.80 billion in financing was approved last year, representing a 387% increase over 2021. The amount comprised AED 1.20 billion of direct financing and AED 611 million of indirect financing through the credit guarantee scheme with partner commercial banks.
Meanwhile, Salah Mohammed Amin, CEO of Emirates Islamic, said: “[The partnerships] reflects our shared commitment to supporting the growth of the segment in the UAE, as we strive to enhance the overall SME business ecosystem and make financing more accessible.”
Amin added: “SMEs are a key driver of Emirates Islamic’s growth strategy and we offer a wide range of business banking products and services tailored to meet the needs of companies in this critical sector.”
It is worth noting that Fitch Ratings affirmed its 'AA-' long-term issuer rating (IDR) for Emirates Development Bank with a stable outlook earlier in April.
In 2022, Emirates Islamic Bank achieved 51% higher net profits at AED 1.24 billion when compared to AED 823.08 million in 2021. Meanwhile, its shareholders decided not to distribute cash dividends for last year.
