Abu Dhabi, UAETuesday 11 December 2018

Commercial Bank International expects 5 per cent loan growth in 2018 as oil and debt demand pick up

The Dubai-based lender has cut costs by closing branches and boosting its digital capabilities in 2017

Mark Robinson, CEO of Commercial Bank International, expects 5 per cent loan growth in 2018. Alex Atack for The National
Mark Robinson, CEO of Commercial Bank International, expects 5 per cent loan growth in 2018. Alex Atack for The National

Dubai-based bank Commercial Bank International expects 5 per cent loan growth this year as the UAE’s economy turns the corner amid higher oil prices and demand for debt increases, its chief executive officer said.

“I think 2018 has the potential to be slightly better than 2017 if only because we are seeing more stable oil prices and other activities leading to more investments in the UAE,” Mark Robinson said in an interview with The National. “It will be a better year but there still will be some challenges. We think the overall market will grow at 5 per cent and that we will grow at more or less the market rate.”

CBI’s loan growth in 2017 was “flat” though the market as a whole from the most recent bank results suggest mid- single digit loan growth for the UAE banking industry in 2017, he added. Healthcare, contracting, manufacturing and distribution are among industries that show strong potential.


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CBI underwent a massive balance sheet clean-up in 2015 to deal with bad debt that had accumulated. The lender booked a loss of Dh466.6 million in 2015 after it reduced non-performing loans by Dh1.38bn to Dh983m. Since then, Mr Robinson, who joined the bank in 2014, has taken a number of other bold measures to bring the lender back to profitability.

As well as cleaning its balance sheet, the bank has cut costs by closing branches and boosting its digital capabilities, a strategy that paid off in 2017. As a result of those efforts, its retail customer base grew 17 per cent last year while the number of new credit card customers rose 56 per cent over the period. Retail banking deposits rose 11 per cent while income from the division increased 3 per cent year on year to Dh307m.

CBI is not the only one spending money on digital technology. Banks in the UAE have been accelerating in recent years the shift from a traditional branch model to one based more on online banking. Lenders including Mashreq, HSBC and Abu Dhabi Islamic Bank have been investing in artificial intelligence and partnering with fintech companies to become more nimble and lessen their reliance on human resources. Emirates NBD, Dubai’s biggest bank by assets, said in July it plans to spend Dh1 billion on technology over the next three years to help reduce costs.

“More and more of our clients, both on the retail side and on the wholesale side don’t want to deal with a bank that requires them to fill out lots of paper forms and interact in a labour intensive or inefficient way,” the executive said. “Not just the digital capabilities but other changes we’ve made will go a long way to make us one of the easier banks."

The bank’s net income last year increased 40 per cent to Dh175 million in 2017 from 2016. Net interest income rose 10 per cent year-on-year to Dh556m while impairment charges fell 8 per cent from the previous year. The non-performing loan ratio dropped to 7.2 per cent in 2017 from 8.7 per cent in 2016.

CBI closed about 40 per cent of its branches last year as a result of investment in new technologies and was also able to reduce the workforce by 18 per cent, Mr Robinson said.

The reduction of expenses as a result of those moves weren’t reflected in the 2017 results because the bank had made a number of one off purchases for technology that masked the savings made last year but that will likely be seen in 2018 results, he said.