nbad reports aed 1.76 bn net profit
Operating Income increases to AED 2.56 bn
The Board of Directors of NBAD discussed the 3rd quarter results, and reported 3rd quarter net profits of AED 576M, 14% above the 3rd quarter of 2006 making cumulative profits for the 3 quarters of AED1.76 Billion, 8% above comparable in 2006 and representing an annualized EPS of AED 1.48 up from AED 1.37 (restated) in the comparable period of 2006. The annualised return on equity was 24.9%, in line with the Bank’s medium term strategic plan.
Total assets reached AED 117.5 Billion at the end of the 3rd quarter of 2007, up 38.4% over the same period for 2006, with customer deposits and loans up 37% and 24% respectively. Capital resources including the AED 2.5 Billion of Tier Two subordinated convertible notes, reached AED 12.8 Billion, up 17% from the corresponding period in 2006.
Operating income for the 3 quarters of 2007 reached AED 2.56 Billion including non-interest income of AED 837 Million, up 16% from comparable period. Operating expenses grew by 44%, which resulted in a cost income ratio of 28.4%, compared with 22.8% in the 3rd quarter of 2006, below our cap of 35%. Operating expense growth was high but within plan, reflecting the planned and continued investment in infrastructure, systems, network, people and brand. “As I have indicated before, over time, the cost income ratios of UAE banks are likely to move closer to international norms”, Michael H Tomalin, the Chief Executive commented.
Domestic banking contributed 59% to Group profits. Domestic banking profits increased 10% to AED 1 Billion on the back of strong performance of the corporate business. International banking contributed 16% and profits increased to AED 284 Million or 11% over the corresponding period. Our International banking business continues to do well and is expanding fast. Investment banking businesses contributed 18% to group profits with profits increasing 9% to AED 319 Million. Improving local stock markets helped both our asset management and equity broking businesses, although performance remains below historic levels. The profit from the private banking business which started in late June 2007, reached AED 14 Million. Our Head Office, which is run like a business contributed 7% with profits increasing to AED 119 Million. We expect to start the operations of our Islamic subsidiary in Abu Dhabi by the end of 2007 with our real estate subsidiary to follow in the 1st Quarter of 2008.
Net impaired asset provisions were AED 21 Million in the first three quarters of 2007 against AED 37 Million for the same period in 2006. Overall, provisions are modest in comparison with the size of the Bank’s business and reflect our relatively conservative credit strategy and strong asset quality. The provision cover of impaired assets was 105% by the end of the 3rd quarter of 2007.
NBAD has one of the highest credit ratings in the region comparable with many medium sized European banks.
Commenting on the overall results, Mr. Tomalin said: “The results are solid and the core businesses of the bank are performing satisfactorily. NBAD is well positioned to take advantage of the huge growth opportunities in Abu Dhabi and play a significant part in the economic development of the nation. Equity markets are improving which will help our brokerage and asset management businesses. The Bank has no direct or indirect exposure to CDOs, SIVs or the US sub prime mortgage market although of course it does have exposure to financial institutions that do. No new provisions were required this quarter as a result of the US sub prime crisis. “The return on equity of 24.9% represents one of the best in the industry, both locally and internationally, and in line with our 25% medium term objective.” Michael Tomalin added.
