National Bank of Abu Dhabi Sunday announced net profits of AED 1.14 Billion, 41% up on 2003, the first time any UAE bank has recorded a profit above AED 1 Billion. The profit represents a return of 25.7% on capital resources, one of the highest in the Gulf, and earnings per share of AED 12.08. Commenting on the result, Chief Executive, Michael Tomalin said, “We are delighted. In 1999 when the Bank earned AED311 Million we set a plan to make AED 1 Billion in 5 years. This year we have achieved that goal”.
2004 revenues of AED 1.7 Billion were up 37% from last year, whilst costs at AED 488 Million were up 18%. The cost income ratio reached 28% in 2004, from 33% in 2003, which represents a high level of operating efficiency. Net new provisions were AED 81 Million.
All the businesses performed well. The Domestic Bank’s operating profits rose 27% to AED 590 Million. International profits were up 12% to AED 257 Million. Investment Banking performed particularly well benefiting from active and rising local equity markets. Investment Banking profits were up 149% to AED 363 Million. Head Office, which is run as a business, providing services to the front line businesses and employing the Bank’s capital also had a good year, with profits reaching AED 36 Million.
Total assets of the Bank exceeded AED50 Billion for the first time: another record amongst UAE banks. Total assets were AED 56.3 Billion, 29% up on 2003 with deposits up 23% to AED 38.7 Billion. Capital resources reached AED 5,185 Million at the end of 2004 which compares with AED 2,825 Million at the end of 1999, the start of the Bank’s planning cycle. The Bank’s strategy to focus on return on capital employed, plus a measured dividend policy, has allowed this 84% capital increase over the 5 years to be financed exclusively from retentions.
Commenting on the results, Tomalin said, “The Bank has progressed across a broad front. The Bank has invested in its franchise, its people and its systems. The 2004 result has been a little flattered by good markets, but the underlying performance is sound, and reflects the strong fundamentals of the UAE and Abu Dhabi. Net provisions in 2004 were modest with good recoveries which will help strengthen the Bank’s balance sheet and its ratios”.
Looking to the future, Tomalin said, “In some ways 2004 is something of a high water mark. We expect more modest but positive growth in 2005 and we will need to invest to maintain our competitive advantage. We plan to invest more in the business – in new markets, in a new core system, in our people. We have set new and demanding targets for 2009”.
