CBI plans to open 10 branches in 3 years

Commercial Bank International (CBI) has shrugged off talk of it merging or being taken over and says, on the contrary, it plans to open at least 10 new branches across the UAE.

The ambitious expansion programme was revealed to Emirates Business by Douwe Oppedijk, Chief Executive Officer of the bank.

"CBI has a good presence in Dubai and Ras Al Khaimah and our expansion plan will focus on other emirates, especially Abu Dhabi and Sharjah," he said. "We have six branches and plan to launch at least 10 new ones within the next two to three years. This expansion will be decided by trends in our customer base. There will be branches for corporate and retail banking. We are also planning to expand our range of services."

He said: "Recently we launched our training centre in Sharjah to prepare our staff for this expansion. This is a very advanced centre, which operates similarly to a branch. The expansion will continue as we have a clear commitment from our shareholders to fund growth and improve our service quality. CBI has one of the highest capitalisations in our banking segment, which will enable us to execute our plans."

Oppedijk, in his first interview since becoming CEO, ruled out organic expansion outside the UAE.

CBI was launched in Ras Al Khaimah and is headquartered in Dubai.

"CBI has no plans to go outside as we tried this before and found that it is better to focus on the local market at present. We have a long list of correspondent banking relationships outside the country to serve the international business of our clients and this arrangement is doing well," he said.

Asked about the decline in CBI's net profits during the second quarter of 2008, he stressed that total operating profits and revenues increased by 92 per cent during the first half of the year compared with the same period in 2007.

Oppedijk said: "CBI's results show a very strong growth in operating profits. This is the result of the strong performance of the UAE economy as our clients are achieving high growth rates and this pushes up our interest revenues. CBI's interest-based business is very strong and we will be building on this base. Our net profits dropped slightly because we have taken a decision to set aside some reserves to strengthen our balance sheet and in preparation for the future expansion of our operations as well as the development of some businesses in the bank.

"Net profits are not always the indicator of a strong balance sheet because CBI preferred to strengthen its position and increase its reserves rather than declare high net profits. This will not affect our balance sheet, on the contrary all our ratios became stronger. We saw the high growth in net profits of the banking sector in the country, but every bank has its own strategy and it was important for us to strengthen our business lines."

Oppedijk stressed the importance of expanding CBI's corporate banking services, a sector that represents between 60 and 65 per cent of the balance sheet.

"The high growth in the UAE's economy led to the fast expansion of or corporate clients business and this increased the demand for our corporate banking services and products," he said. "This trend will continue in the short term. CBI has a strong client base from the medium-size corporations and this segment will continue to increase in the future."

The UAE Central Bank has raised concerns about the high services sector concentration in CBI's balance sheet. "There is concentration of 50 per cent of our banking operations in the services sector and 20 per cent in the real estate sector, and according to the UAE Central Bank it is a matter of concern. However, the services sector in the country is growing very fast and this sector is very profitable so we will continue to offer these banking products.

"We are planning to expand our other business lines and this will strengthen our balance sheet but the services sector will continue to be a very important part of our operations," he said.

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