The Board of First Gulf Bank, one of the UAE’s leading financial institutions, has announced record net profits for the financial year ending December 31, 2006. Net profits for the year reached AED 1.536 billion, which is 45% higher than the AED1.056 billion results for 2005.
In 2006, the growth was achieved across all businesses of the bank highlighting its very solid financial positioning and abilities in the face of increased competition and evolving market conditions.
The record results were achieved through its commitment to expanding its service offering, delivering world-class financial services and products and developing new investment opportunities in line with the UAE’s economic growth.
Abdulhamid Saeed, Managing Director, First Gulf Bank, said: “The sound strategy implemented by the bank’s management and as approved by the board of directors has ensured First Gulf Bank’s emergence as one of the UAE’s largest financial institutions.
“The bank has begun executing an expansion strategy which, on a local level, has seen three new branches recently open in the UAE. Moreover, in line with its international expansion strategy, First Gulf Bank will open in 2007 representative offices in major international financial centers, starting with Singapore to be followed by a second representative office in the UK”.
Andre Sayegh, CEO, First Gulf Bank, said the bank is committed to enhancing its performance by identifying potential investment opportunities and revenue diversification. “Though we are proud of our past achievements, our focus is firmly on the future,” said Sayegh. “This forward-looking approach characterises our vision of delivering a promising future for First Gulf Bank,” he added.
Last year, the bank achieved AED 47.7 billion of assets representing an increase of 82% over 2005, and it doubled its total deposits to reach AED 34.4 billion. Total loans and advances reached AED 25.2 billion by end of 2006 – an increase of 85% from AED 13.6 billion in 2005. The achieved Loan to Deposit Ratio of 73% indicates a very high liquidity level.
“Net interest income and other income increased by 37% and 56% respectively. Interest income reached AED 1,208 million and other income reached AED 850 million contributing 41% to the total income.
Earning per share increased from AED 1.01 to AED 1.23”
Profitability ratios were very healthy with Return on Average Equity at 18.2%, Return on Average Assets 4.1% and Cost to Income ratio at 26%. The bank is also showing a very efficient Capital Adequacy Ratio of 21.3% compared to a 37.6% in 2005 following a successful capital increase.
With Shareholders’ Equity at AED 9.0 billion by end of 2006 compared to AED 7.8 billion in 2005, the bank maintains its position among the largest UAE equity based banks.
“During 2006, the bank achieved a tremendous success in a syndicated loan which saw 32 regional and international banks participating in a combined total loan of US $750 million. This underlines the international dimension taken by First Gulf Bank over the last few years. The trust in FGB capabilities and efficiency was a factor that also led to the bank’s recent signing of an agreement with the Abu Dhabi Finance Department to fund housing loans for UAE nationals,” explained Sayegh.
During its meeting, the First Gulf Bank board recommended the distribution of 70% cash dividends for last year subject to Central Bank and shareholders’ annual general meeting approvals.
The international rating agency Fitch Ratings recently upgraded First Gulf Bank’s ratings two notches from BBB+ to A with a stable outlook making the bank the only UAE bank to see such a double notch upgrade in one year. “This, underlines the stability and steady growth in the bank’s performance, the high calibre of the bank’s loan portfolio and the low ratio of NPL’s to Gross Loans – at 1.4% - which is combined with a Provision Coverage Ratio of 130%” added Abdulhamid Saeed.
“The Board is satisfied with the bank’s 2006 performance and our future strategy will be to maintain profitability and growth levels throughout operational expansion and evolution into a fully-fledged financial institution not limited to conventional banking. Initiatives will see us enter Islamic banking, Merchant Banking, Real Estate and Structured Products.”
