The chief executive of Commercial Bank of Dubai, Peter Baltussen, is looking to lend even more in 2014 after seeing the banks loan book increase by more than 11 per cent in 2013.
We achieved an almost 12 per cent growth in our loan book last year, and I have no issue doing a similar figure if not higher this year. We could do that comfortably, he tells MEED.
He says that the bank will achieve this growth by increasing its personal banking business as well as boosting its trade and Islamic finance capabilities.
The bank reported a net profit of more than AED1bn ($272m) in 2013, an increase of 18 per cent on 2012 profits.
Baltussen says that 2013 was a good year, and that unlike a number of other UAE banks which saw serious drops in profit during the financial crisis in 2008, CBD managed to increase its profits every year.
The main driver was top line growth. I was very happy with that. The profit growth wasnt just due to cutting costs, he says.
The top line growth came partially from personal banking and the loan book grew by 35 per cent, which is actually quite a lot compared to other banks, he says.
When other banks in the UAE ran into trouble in 2008 due to high exposures to Dubais collapsing property market, CBD was able to escape the worst of the crisis.
We rarely went into real estate development. It is not our game. We work with family companies. We rarely did standalone real estate developments and we will not do that going forward, he says.
If you are a family-owned company you think twice before you spend your dirham, he said.
In line with other UAE banks, the bank did make use of Ministry of Finance funding in 2008, but repaid the AED1.5bn-worth of deposits in the first half of 2013 ahead of the December 2016 deadline.
CBD decided it was cheaper to raise money via the bond market, and raised a $500m conventional bond priced at 250 basis points last year.
Looking toward 2014, Baltussen says he is keen to expand the banks personal banking side by investing heavily in the banks internet banking capabilities.
He adds that new regulation introduced last year which placed limits on mortgage and personal banking will also strengthen the consumer banking market.
On the personal banking side, there will be growth, but with the enhanced regulation and the credit bureau it will be more responsible, he says.
The bank also aims to increase its trade finance business, supporting trade passing via Dubai from Asia to Africa.
It is a nice clean, short-term self-liquidating business. We love it, he says.
Islamic finance is another target market. That is growing extremely fast, he says, referring to the banks dedicated Islamic finance window.
There is a lot of demand for Islamic products, loans, Ijara, working capital, trade, he says.
The prospect of Dubais hosting of the Expo 2020 will also open up opportunities for the bank.
I like the exposure the Expo will be bringing to Dubai but it is very important that Dubai has a clear plan what to do with Expo infrastructure after it is finished, he adds.
Other areas of growth include the banks syndicated lending arm and its project finance division. Acquisition financing could also pick up in 2014, he says.
Syndicated lending is coming back, Baltussen says.
He adds that even the prospect of the new global Basel III banking regulations will not affect CBDs lending appetite, explaining that the bank meets all the three main ratios set by the regulators.
If you look at the liquidity coverage ratio, it should be minimum 50 per cent. We are at 116 per cent so more than twice the guidelines, indicating that we are very liquid. The leverage ratio should be at a minimum of 3 per cent and we are at 13 per cent, he explains.
We are comfortably meeting the Basel III guidelines and I dont see any major issues going forward, he says.
CBDs positive outlook is reflective of wider strengthening of the UAE banking sector. Since the crisis, most banks have taken serious provisions to improve their balance sheet.
Many banks are now ready for growth. In terms of top-line growth, 2013 was a clear transformational year and I see this trend continuing in the coming years, he says.