It is tough to more than double the asset base of a bank, its profitability as well as its market share. But Bernd van Linder has done it, not once, but twice for two separate banks.
He also has the rare distinction of achieving this feat in two Gulf countries. First in Saudi Arabia when he led Saudi Hollandi Bank, and then in the UAE as chief executive of Commercial Bank of Dubai.
How did he achieve it?
“The very simple answer is that I like challenges,” Mr van Linder tells The National in an interview at the CBD headquarters in Dubai. “What really excites me is leaving things better than I found and that's what I go to work for.”
Holding a doctorate in artificial intelligence, Mr van Linder, who calls himself a very “hands-on” corporate leader, arrived in the Gulf region in November 2006. He joined Saudi Hollandi – one of the oldest financial institutions in the kingdom, which later became Alawwal Bank after its merger with Saudi British Bank – as treasurer.
He rose through the ranks to become its chief executive in May 2009 and managed to transform its fortunes during his six-and-a-half year tenure at the bank.
“We doubled the bank in size as a team, its balance sheet as well as its profitability from 1 billion Saudi riyal ($266.7 million) to 2 billion riyal. We moved it to become a 100-billion-riyal bank,” he says.
And in 2016 opportunity knocked, with CBD wanting him to replicate what he had achieved at Saudi Hollandi.
“To try to do the same here at a bank with a good reputation, well managed and very stable, I really jumped at that,” he says. “I thought, yeah, I want to do that again in another market, and I really will give it my best to try to achieve what we did in Saudi Arabia.”
When Mr van Linder took over as the chief executive of CBD in January 2017, the lender’s asset base was around Dh64 billion ($17.43 billion), which in the past seven years has more than doubled to Dh141 billion.
But for him, doubling CBD's share of the overall UAE banking market is a bigger yardstick of success.
Strategy cycle
From a little over 2 per cent about eight years ago, the bank has increased its share of the market to nearer 5 per cent.
The bank is midway through its latest three-year strategy cycle and Mr van Linder says it is on track to achieve its very “aggressive KPIs”, to fend off the “extremely fierce competition, especially over the last 12 to 18 months”.
“So, our focus is on market share rather than on assets,” he says. “We have to grow faster than the market and that's our first priority. The second priority is that we have to hit this 5 per cent market share mark, because that's really the level at which you can continue to be relevant in any market.”
Being ranked as the seventh largest bank in the UAE by assets, “we're in a fairly unique position … as the banks ranked five and six are much larger than we are, but banks number eight and nine are much smaller, so, it's almost a league of our own that we've created”, he adds.
Economic tailwinds
Still, maintaining the growth momentum was not a small achievement, given that more than 50 licenced banks are jostling for a piece of the same pie in the Emirates, he says
“Taking this bank and turning it from what it was into a very aggressive, customer-focused, delivery-oriented organisation – I’ve loved doing it and I'm very happy that it worked out,” Mr van Linder says.
CBD, which reported net profit of Dh3.03 billion at the end of last year, said its net income for the three months to the end of March climbed to Dh828 million, an annual 18 per cent rise.
The success the lender has achieved in the past few years, he says, was in part driven by the robust economic growth.
The UAE’s economy grew by 4 per cent last year, driven by a strong expansion in its non-oil sector. The country's real gross domestic product reached Dh1.776 trillion, the Ministry of Economy said in June.
The non-oil economy grew by 5 per cent annually to Dh1.34 trillion, accounting for more than 75 per cent of the country's economic activity, while oil-related activities contributed Dh434 billion to overall GDP.
The UAE Central Bank expects real GDP to expand by 4.4 per cent in 2025 and increase to 5.4 per cent next year, it said in a report last month. This performance is driven by the "expected robust dynamism" of non-hydrocarbon activities and a "robust increase" in the hydrocarbon sector following updated Opec+ production plans, the regulator said.
Non-hydrocarbon GDP is expected to grow by 4.5 per cent in 2025 and in 2026, it added.
Geopolitical headwinds, including the 12-day war between Israel and Iran that threated to derail crude oil supplies from the energy-rich region, have not dented the UAE's economic growth prospects and the country’s perception as a safe destination for global investment flows, Mr van Linder says.
“From my perspective, if anything, it has shown the world that this is a haven, an oasis … that it's the envy of the world,” he says.
“Right now, it's the best place in the world to live, the best place in the world to do business. If you ask for my personal view, I think that it will continue to be the case and I don't expect any outside influences or events changing that.”
Retail to drive growth
Looking ahead, CBD is pushing to further boost growth with a focus on retail banking operations. “Hyper growth in our mortgages and credit cards” as well as a “bigger and more profit-oriented financial institutions business”, is what Mr van Linder says will help the bank achieve the 2024-2026 strategy goals.
The lender was already in a good stead as a commercial banking institution when he took charge. However, going all the way back to 2017, retail banking has accounted for the major chunk of the growth it has posted so far.
“In 2017, we said we wanted to be a big bank in mortgages and there have been quarters when we were number one or two in terms of mortgage origination, a very clear reflection of our [successful] strategy,” he says.
In recent years, CBD has started lending to government-related entities across the Emirates and has also managed to build its financial institutions as well as cross-border businesses.
Retail, institutional and corporate businesses are contributing about one third each to CBD’s revenue, and Mr van Linder says he is not unhappy with the current split.
“If there is to be a change to it, then I would like the percentage of the retail bank to increase further. If we would be able to bring that to 40 per cent of the total, that would be a good thing for the bank."
With the consistent population and economic growth the UAE has experienced, achieving that target is “not impossible”.
“The key for us will be to we continue to be agile. We move fast, because that's what customers expect, and that's what customers demand and reward you for,” Mr van Linder adds.
SME lending growth
Building the lending book for emerging corporates and small and medium enterprises is the next segment CBD plans to focus on.
“It's not new, but it's a difficult segment to get absolutely right. If you look at the UAE, there are banks that got it right and there are also banks that have taken hits by operating in this segment,” he says.
CBD’s loan book, which grew 11.7 per cent annually to Dh93 billion at the end of the last year, is set to hit high single-digit growth this year. Net profit is expected to hit high single-digit to low double-digit growth level in 2025, he adds.
While focus remains on organic growth, CBD is also not shying away from mergers and acquisition opportunities, if the asset on offer makes commercial sense and aligns with the bank’s strategic plans.
“We're open to anything, but the working assumption is organic all the way,” Mr van Linder says.
CBD has already acquired the UAE credit card portfolio of Saudi lender Samba Bank, as well the Najam card business of Majid Al Futtaim.
“We've done that twice … we're open to doing that again,” he says. No deal is currently brewing on the front burner, he adds.
Focus on tech
In line with the global push towards technology, CBD's capital expenditure on digitisation in the past five years has risen more than fourfold and Mr van Linder sees that investment continuing to increase in the short to medium term.
“We're ready for open finance,” he says. “There's more to be done on digitising services that we haven't done yet and there will be continuing investments.”
The need to invest more in digitalisation as well as incorporating AI into banking is also driven by the emergence of digital banks in the UAE that have grabbed “some market share” from conventional financial institutions in the country.
But what is more significant then the market share is the “wake-up call” for banks from their digital-only peers when it comes to customer experience, he says.
“This is your competition and you will only be able to compete with these guys if you get your end-to-end processes right. And this is not just about delivering a fancy banking app.”
Biggest challenge
With competition heating up from conventional peers as well as digital-only lenders in the UAE, staying relevant to customers is the biggest challenge for Mr van Linder.
“We operate in a market with 52 licensed banks, where the top four have an 80 per cent market share, we are number seven and there’s an enormous tail of all kinds of smaller banks.
“In this market, every customer always has a choice … how can we make sure they pick us … that really is the thing that keeps me awake.”
However, the father of 15-year-old triplets says he has no regrets in moving from a bigger bank and adds “what's not to love about Dubai, and also this bank?”
CBD is “big enough to do everything” and yet small enough for him to get involved in every level of operation.
Mr van Linder's vision for CBD has not changed much since taking charge, with the goal still in place of turning the bank into a “high-performance organisation”.
“To me, an achievement is a midpoint to something else. We're not there where I want to take this bank, and for sure, there's much more to be done,” he says. “We doubled in size, we tripled in net profit … but this is definitely not the end.”
Mr van Linder sees CBD evolving into a “bank of everything” for its customers.
He wants to be remembered as the man “who did it … who put an institution in place that was so well organised, well structured and resilient that, in a way, anybody could run it”.
