NBAD’s Q3 net profit rise 41% to Dh 914 million
National Bank of Abu Dhabi (NBAD) recorded net profits of Dh914 million in the third quarter of 2009, an increase of 41% compared with Dh651 million for the third quarter of 2008. Cumulative profits for the nine months amounted to Dh 2,591 million, 2.5% up on the comparable period of 2008 and representing an annualised EPS of AED 1.53 compared with the previous corresponding period of AED 1.51.
Annualised return on equity (ROE) was 22.5% and in line with NBAD’s target of 20% for the current year.
Net impairment charges for the quarter were Dh 284 million of which collective provisions were Dh142 million, specific provisions and write-off charges were Dh180 million, mitigated by recoveries of Dh38 million. Total provisions for non-performing assets reached Dh2, 254 million of which Dh1, 288 million were collective and Dh966 million were specific.
Impaired assets increased by Dh219 million in the quarter totaling Dh1, 541 million. The Non-performing loans ratio stood at 1.2% with coverage of 146%.
H.E. Nasser Ahmed Khalifa Al Suwaidi, Chairman of NBAD said, “The UAE banking sector remains stable assisted by a proactive regulatory framework that has contributed to the resilience of the banking system under the present tough global financial conditions. NBAD’s robust risk management practices and no exposure to exotic products in its banking model reflect the prudence of the bank’s risk strategy and the quality of its banking businesses.” Total assets amounted to Dh186 billion at the end of the 3rd quarter 2009, up from Dh165 billion as at 31 December 2008. For the first time in the history of the bank, assets exceeded US$50 billion. Customer deposits increased by 6.8% and loans by 14.7% compared with 31 December 2008.
Capital resources, including the Dh 4.0 billion of Abu Dhabi Government Tier I capital and Dh2.8 billion subordinated convertible notes reached Dh 23.1 billion, up 33% from Dh17.4 billion compared with 31 December 2008. As at 30 September 2009, the Basel II capital adequacy ratio was 18.4% and the Tier I capital ratio 15.7%.
At the beginning of September 2009, NBAD issued a 5-year Medium Term Note for US$ 850 million under its EMTN Programme. The transaction book order was 4.8 times oversubscribed with a broad global range of investors. NBAD was the first bank in the region to tap the market and the coupon was 4.5% fixed. During the same month, NBAD also issued Medium Term Notes totalling HK$ 1,023 million, or US$ 132 million equivalent, in three separate private placements.
Better margins, more business and funding cost management led to a 36.7% improvement in net interest income of Dh3, 343 million for the nine months of 2009 compared with Dh2, 445 million for the corresponding period of 2008. For the nine month period, fees and commissions and other non-interest income were slightly lower by 3.7% at Dh1,452 million from Dh1,508 million, but 43% higher at Dh528 million for the third quarter 2009 compared with the third quarter 2008.
“Operating expenses for the nine months rose by 30%, which resulted in a cost income ratio of 28.5% compared with 26.5% for the nine months of 2008, below our cap of 35%. Operating expenses growth reflects the ongoing disciplined investment in our franchise, people, network and infrastructure as we expand organically throughout the region” he said.
Operating profits from the Group’s divisions for the nine months of 2009 were AED 3,431 million. Domestic Banking’s (comprising consumer, commercial and elite banking) operating profits of Dh 654 million represented 19% of NBAD’s operating income. Financial Markets contributed Dh686 million or 20%; International Banking’s profit contribution was 12% or Dh 407 million and Corporate ‘&’ Investment Banking’s contribution totaled Dh1,495 million or 44%. Islamic business earned Dh40 million and Global Wealth Dh21 million a combined contribution of 1.8%. Head Office is run like a business and contributed Dh128 million before any collective provisions which are carried centrally in the Group’s head office account.
Chief Executive Michael Tomalin said, “For the first time this year, we are ahead of historic 2008 earnings comparables. Nevertheless, we have again, in this quarter, been able to make substantial voluntary collective provision to put us in a strong position to face any credit challenges ahead.”
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