First Gulf Bank converts AED 3.6 billion mandatory convertible bonds into 125 million ordinary shares

First Gulf Bank PJSC, one of the largest equity based banks in the UAE, announced today that it will convert AED 3.6 billion mandatory convertible bonds into 125 million new ordinary shares. These bonds will be converted at the initial subscription price of AED 28.8 per share and the new shares will be listed on Abu Dhabi Securities Exchange on February 21, 2011. 

As a result, FGB’s share capital will be increased to 1.5 billion from 1.375 billion. The three-year convertible bonds were issued in July 2008 to mainly fund the bank’s corporate and retail organic growth. 

“We are pleased to announce the early conversion of our convertible bonds,” said Andre Sayegh, Chief Executive Officer, First Gulf Bank. “This decision reflects positively on the bank’s financial performance and strong liquidity position. The Board of Directors and the management are confident of the bank’s rising profitability. We are confident that as common shareholders, the bondholders will benefit from their investment in the bank’s future growth over the years to come." 

The list of UAE strategic partners whom FGB convertible bonds were issued to, includes: Mubadala Development Company; Emirates Investment Authority; Abu Dhabi Retirement Pensions and Benefits Fund; Dubai Ventures, a member of Dubai Group; Tasameem, Seven Emirates for Investments and International Trading; Capital Investment; Sanabel; Al Ain International Group; Al Nahdha Investments; and Al Tadamoun Investments. 

First Gulf Bank’s revenues for FY 2010 reached AED 6.305 billion or 2% higher than the revenue of AED 6.164 billion in FY2009. Revenue from the core banking operations stood at AED 5.903 billion an increase by 11% compared to the previous year, while net profit from core banking operations reached AED3.170 billion an increase of 27% compared to 2009. 

Net interest income and income from Islamic financing for the year 2010 stood at AED4.257 billion and was 11% higher than 2009, this was the result of efficient management of the sources and uses of funds. The bank was, in effect, able to maintain its net interest margin at the 3.59% level in 2010, a minor decrease against 2009 level of 3.67%. 

The bank’s outlook for 2011 remains positive. The bank’s healthy balance sheet allows it to invest further in profit-generating businesses. The management expects that the strong business foundation based on an active risk management, a clear vision and well-defined strategic objectives will help the bank in achieving long-term objectives through focus, flexibility and dynamism. The bank will continue to build upon its stable business activities, maintaining its strong leadership position and competitive edge.