Andre’ Sayegh, CEO of FGB
First Gulf Bank PJSC, (FGB), one of the major leading banks in the UAE, today reaffirmed its continuing strong financial performance with the release of its Q1’2013 figures. The bank recorded a Net Profit of AED 1,046 million in the first quarter of this year, constituting a 12% increase compared to the same period in 2012.
With a core business strategy in place that is delivering consistent growth, FGB’s solid business fundamentals and company policies are continuing to deliver both an on-going elevated financial performance and enhanced shareholder value. The bank’s principal focus remains on a triangular balance of efficient balance sheet management, best-practice risk management and delivering properly-marketed products and services which are geared to customer needs across all divisions at a local and international level.
Q1 2013 income statement highlights
FGB started 2013 with a positive momentum, whereby the analysis of FGB’s revenue during the first Quarter, highlights a very strong contribution from the Net Interest and Islamic financing income at AED 1,375 million; 6% higher than Q1 of 2012. Furthermore, the Net Interest Margin of 3.6% was maintained at the same level as Q1 of last year.
During Q1 of 2013, FGB remained the leader in the market through efficiently managing the group’s expenses. FGB ended the quarter with a cost to income ratio of 20.6%, which is by far the lowest in the UAE banking industry. Compared to Q1’ 2012, Revenues have increased by AED 202 million, while expenses increased by only AED 62 million and Provisions by AED 21 million.
The income generated from fees and commissions by the Corporate and the Retail business totalled AED 346 million; which is 13% higher than Q1’ 2012, were back on ascending trend exceeding Q3’2012 by 22% and exceeding Q4’2012 by 1%.
Fee Income generated by Treasury and Investment activities is AED 112 million, which is much higher than the AED 34 million that was realized during Q1’ 2012.
Commenting on the bank’s performance during the first quarter of this year, Andre’ Sayegh, CEO of FGB said: “FGB is off to a highly positive start in 2013. Our priority remains solid control on balance sheet management, simultaneously factoring a consistent and paced growth. As an integral part of our business strategy, we are investing in our human capital resources and infrastructure. We are highly focused on core areas that we see as integral to driving results, namely; balance sheet management, conservative risk management, customers’ centricity, and effective product offering.”
Sayegh continues: “We are strongly confident that we have the right strategy in place to sustain a superior performance and adapt to changing market conditions locally and in the countries where FGB operates. Net profits for the first quarter of 2013 are 12% up on the same quarter last year, we have strong liquidity and through a specialized team we have reduced the ratio of non-performing loans even further. Furthermore, we have set a solid framework in place for continued international expansion which we see as a fundamental success factor for future business growth. We will continue to drive the right positioning for FGB’s core business area of banking.”
The core banking Net Profit represented 97% of the total net profit by the end of March 2013. The remaining 3% were contributed by the subsidiaries and associate companies of the group.
FGB’s focus on its emerging global expansion plans continued to generate positive results. The revenue made by the international centres for Q1’2013 contributed 5% to the total revenue of the group.
Abdulhamid Saeed, FGB Managing Director and Board Member, commented: “Our most important objective is about delivering sustainable and superior value to all our stakeholders, namely; our shareholders, customers and staff. This has been and will remain the long-term goal of FGB’s Board as well as its Executive Management team. Our continued momentum is a result of a clear and transparent strategy to expand our business in three dimensions, first of all, employ talented staff, second, we focus on a targeted customer base in strategic markets locally and overseas and third, expand our product offerings to suit our customers’ needs, Our financial performance in the first quarter of 2013 is another milestone in FGB journey to deliver superior results to all our stakeholders. ”
Balance Sheet – Liquidity
During Q1’2013, Loans and Advances grew by 3%. The growth was diversified and spread; across our businesses, a mix of Wholesale Institutional Corporate Group (60%), Retail Group (36%) and International Group (4%).
FGB focused on efficiently managing its excess of liquidity in order to bring it to appropriate levels. The loan to deposits ratio at end of Q1’2013 was at 99%, while the regulatory advance to stable deposit ratio of 82% remained far from the maximum allowance of 100% and the liquid asset to total assets ratio was at a very comfortable 16%.
Capitalisation and Earnings per Share
By the end of March 2013, Total Shareholders’ Equity stood at AED 28 billion, and Capital Adequacy Ratio was at 19%. The Earning per Share for the first three months of 2013 is AED 0.34 which is 17% higher than AED 0.29 for the same period in 2012.
During the first quarter, the bank paid out AED 2.5 billion in cash dividends following the General Assembly of Shareholders’ decision of 27th February 2013. This distribution was the highest ever in the history of FGB and, indeed, in the whole UAE banking sector.
Furthermore, the bank settled its debt of AED 4.5 billion to the UAE Ministry of Finance (MoF), four years before its final maturity.
Asset quality and Provisioning
Ratio of Non-Performing Loans (NPLs) to Gross Loans decreased from 3.3% by end of 2012 to 3.2% and provision coverage was increased from 96% by the end of 2012 to 102% by the end of Q1’ 2013. This reinforces FGB’s previous statements and guidance that asset quality has stabilised. The same ratio was at 3.5% by end of March 2012.
Sayegh concluded: “During 2013 and beyond we will continue to invest in our people, our businesses, our relationships, our network, our technology and our products. Thanks to a combination of strong guidance from our Board of Directors, as well as the dedication of all our staff, locally and in international locations, we are strongly confident that we will expand our business success and take the bank to new heights.”