Dubai: Commercial Bank of Dubai (CBD) marked the sixth consecutive year of profit growth last year with a 19 per cent growth in net profits. The bank expects to maintain strong profitability this year from improved balance sheet growth, improving asset quality and strong recoveries of non-performing loans (NPLs) against which provisions have already been made.

“We expect the asset quality to improve further this year with the NPLs to total assets set to come down further. With asset price recovery witnessed during the last two years, companies are in much better position to repay,” said Peter Baltussen, Chief Executive Officer of CBD.

CBD has a little more than Dh3.2 billion of provisions against NPLs. Many of these loans are backed by strong collateral, while the bank has already made extra provisions for those loans categorised as NPLs.

“A lot of clients are selling assets following price recovery. I think our recovery rate will be higher in 2015 than in 2014. Our NPLs will come down and coverage ratio will go up further. These recoveries will be a direct boost to our profits,” said Baltussen.

The launch of a credit bureau and improved transparency in the market is expected to boost the overall asset quality in the banking sector, according to Baltussen. “The new loans we are underwriting, especially in the consumer banking space, we clearly are in a better position to judge the risks and that will substantially reduce the possibility of any unexpected spike in NPLs,” he said.

On lending policy, the bank is conservative in its approach. “We don’t want to create difficult situations for our customers by lending them more than what they can repay. The last thing I want to hear is that someone is in trouble because we gave a loan and we made some money on it,” said Baltussen.

The bank has a wealth management offering called Al Dana targeted at the wealthy clients. With the rapid growth of the affluent segment of customers in the UAE, CBD is focusing on both liabilities and asset products in this segment with savings, investments and mortgage options tailored to cater to this segment of the market.

CBD’s mortgage business is growing at a healthy pace following the recovery in property prices last year. The recent moderation in property prices is seen as healthy for the market as it makes Dubai as an affordably global business hub.

To cater to the affluent and the wealthy segment of the consumer banking business, the bank is in the process of building a high networth offering. It is not comparable to what is offered by international private banks. “We have a very important liaison with an important Swiss Bank. For international products and services we can source it through this relationship. Locally we feel that we can do a much better job than any international bank,” said Baltussen. The bank is expected to launch its private banking brand this year.