Banking on success
Commercial Bank of Dubai CEO Dr. Bernd van Linder discusses the bank's business and key trends in the banking sector
How would you describe the year so far for Commercial Bank of Dubai?
“It has been a good yet challenging year. CBD has reported solid financial results, with nine months net profit up by almost 27 per cent compared to last year. We have also managed to outgrow the market in terms of loan growth, reporting a 5 per cent year-on-year growth as of the end of September. Our underlying performance is strong, with all business segments contributing to the improved performance. We should be able to continue this performance into the fourth quarter, deliver a strong full year 2018 continuing into 2019.”
CBD was the first bank in the UAE to launch a digital-only product, what has been the response?
“In February 2017 we launched CBD NOW, the first digital only bank in the Middle East. CBD NOW differentiated itself through a unique onboarding procedure, whereby people could become customers of the bank easily through the CBD NOW mobile app, without having to leave the comfort of their home or office. The take-up of CBD NOW was very strong, and we realised that we should use its unique elements more broadly throughout the bank. We should be a digital bank rather than have one. In July this year, we launched the revamped CBD app, integrating all the unique features of CBD NOW, available to all customers of the bank. CBD is well on the way to becoming a fully digital bank for all customers.”
Is there now a shift in the market away from physical branches to digital offerings?
“The shift has been going on for a number of years already. If you look at some of the markets in Europe, particularly in Scandinavia and the Netherlands, customers do not go to branches at all any more. All functionality in terms of banking services is available on the mobile, and as payments have become cashless, there is hardly a need for branch or ATM visits any more. The situation in China is perhaps even more pronounced where customers do not use cash anymore, everyone is paying through mobile wallets. We are not there yet in the UAE, but we are clearly moving in the same direction. Over 90 per cent of noncash transactions are already conducted through digital channels, the government is aiming for a non-cash, paperless society and the UAE banks will shortly launch the UAE digital wallet. This change will see a shift away from cash, and hence from physical branches and ATMs.”
The UAE banking sector appears to be in a period of consolidation with several mergers potentially in the works, what is CBD doing to react to this trend and would the company consider its own talks?
“The mergers so far announced all had their own rationale and dynamics, which do not necessarily apply to other banks in the UAE. CBD has a strong position with its core client segments, and will continue to grow through providing the best possible services to our clients.”
Recent reports have indicated UAE banks may ask for an easing of mortgage rules, would you be in favour of this?
“Regulators always have to find a balance between managing systemic risk, supporting banks and economic growth. Although one could consider easing regulations on mortgages to further support the real estate sector, current regulations seem well measured and balanced to me.”
What are your expectations for the bank into next year and do you have any expansion plans?
“CBD has a strong client base, a strong capital and liquidity position, and a fantastic team. We are ready for more growth into next year. With the economy of the UAE forecasted to grow by over 3 per cent, we aim to outgrow both the market and the banking sector as a whole again in 2019. Like this year and last year, growth should be broad-based across all segments and sectors. For now, we will focus our growth on the UAE but in future we may consider regional expansion as well.”
Will the bank lend more to SMEs with economic conditions forecast to improve?
“CBD has been supporting the SME segment through providing all banking services, be it liquidity and risk management or lending. We will continue to do so. Economic conditions today are in fact quite supportive, and as I mentioned before, we will grow in all segments, including SME. In almost every economy, SMEs are the main drivers of growth, and the UAE is no different. Working closely with the government, which is particularly focused on supporting SMEs, we will play our part and continue to increase our SME business.”