Bank­ing on suc­cess

Com­mer­cial Bank of Dubai CEO Dr. Bernd van Lin­der dis­cusses the bank's busi­ness and key trends in the bank­ing sec­tor

Gulf Business - - COVER STORY -

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.”

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