Commercial Bank International (CBI) plans to raise its capital within the next 12 to 18 months to help fund an expansion plan to boost lending to individual customers and extend its reach in trade and Islamic finance.
The Dubai-based lender, of which Qatar National Bank owns 40 per cent, is seeking to make its presence felt in the market more keenly, according to Mark Robinson, CBI’s chief executive and a former senior executive of ANZ Bank.
Sine joining CBI last October, Mr Robinson has made about 20 senior appointments.
“Do we think we can maintain really good risk discipline and continue to grow this bank? The answer is yes,” he said.
“As we continue to grow, at some point we have to look at raising capital.”
Mr Robinson would not be drawn into the specifics of how much funds CBI plans to raise, but said the bank could sell new shares or tap the debt market.
Although two-thirds of CBI’s loan book comprise corporate loans (with loans to individuals making up the rest), over the next five years the bank would seek to boost consumer loans’ share of the loan book to 40 per cent, said Mr Robinson.
As part of the strategy to win over more retail customers, the bank plans to spend more money on technology to allow clients to bank online and on mobile phones. CBI has 27 outlets across the UAE.
“If I told you that I would double my branches that would not make a lot of sense,” said Mr Robinson. “When people start a relationship, they might find themselves in a branch. But there’s an increasing proportion of young, digitally savvy people, and they want to do their banking when and where they feel like doing it. It’s not something they want to go to, they’ll do it on their couch.”
Globally, the adoption of digital banking has been a win-win situation for banks, with customers enjoying convenience and speed, while banks save money.
About 800 million customers use mobile banking, and that is expected to more than double to 1.7 billion users over the next five years, according to industry estimates.
In the UAE, which boasts one of the world’s highest rates of smartphone use, banks have been spending millions of dollars to upgrade their digital applications. Emirates NBD, Dubai’s biggest bank, recently said that 80 per cent of customer transactions were now done outside of bank outlets on computers, phones or cash machines.
Besides consumer banking, Mr Robinson is also prioritising trade finance, as CBI might enjoy a business boost if international sanctions on Iran are lifted. The bank is also experiencing trade finance growth in the subcontinent and Africa.
Regarding Mr Robinson’s plan to expand CBI, particularly in consumer banking, the native of New Zealand is undaunted by the competition from leading rivals such as Emirates NBD, FGB, and Abu Dhabi Islamic Bank.
Because of the stiff competition in the UAE, many local banks are expanding abroad or increasing their range of services.
CBI will also have to contend with slowing demand for debt, with many banking executives (including Mr Robinson) expecting loan growth would slow to low single digits this year and next year from about 10 per cent over the past couple of years.
“We don’t have to steal a lot of market share from any particular bank,” said Mr Robinson. “We only just have to take a little bit, so we should be able to grow at a pretty decent rate.”
CBI’s profit last year fell to Dh133.5 million from Dh176.6m in 2013.
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