Andre Sayegh, Chief Executive Officer, First Gulf Bank
In line with its continuing growth and rise in profits, First Gulf Bank PJSC, (FGB), the leading financial partner of choice in the UAE, today announced that it has witnessed yet another successful quarter for the period of Q1 2012. The bank stated that it recorded a Net Profit of AED 935 million, a 7% increase compared to the same period in 2011.
FGB’s strong business fundamentals and sound policies are the key drivers behind generating consistent positive results. The bank’s core strategy continues to focus mainly on efficiently managing the balance sheet, on applying wise risk standards and on maintaining strong marketing momentum while enhancing simultaneously operations in all divisions locally and overseas.
FGB started 2012 with a positive momentum, whereby the analysis of FGB’s revenue during the 1st Quarter, highlighted a very strong contribution from the Net Interest and Islamic financing income at AED 1,297 million; 13% higher than Q1 of 2011. Furthermore, the Net Interest Margin of 3.6% was successfully maintained at the same level as Q1 of last year.
During Q1 of 2012, 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 19.4%, which is by far the lowest in the UAE banking industry. The group expenses amounted to AED 324 million, which was 22% higher than Q1 2011 but 5% lower than Q4 2011.
The income generated from fees and commissions by the Corporate and the Retail Bank totalled AED 307 million; which despite being 24% lower than Q1’2011, were back on ascending trend exceeding Q3 2011 by 18% and exceeding Q4 2011 by 26%.
Commenting on the bank’s performance during the first quarter of this year, Andre’ Sayegh, CEO of FGB said: “We have started 2012 with a strong momentum and we continue to display a consistent growth. Our strength is our balanced business strategy and our structured marketing capabilities to recognize enticing business opportunities, both on the local and international levels. This strategy enabled us to achieve a solid Q1 Net profit of AED 935 million; which is 7% higher than Q1 of last year. Net Profits were split between 97% contributions from our core banking businesses, while the remaining 3% were generated from the subsidiaries and associated companies of the group.”
FGB’s focus on its emerging global expansion plans continued to generate positive results. The revenue made by the international centers for Q1 2012 contributed 4% to the Net Profit.
Abdulhamid Saeed Managing Director and Board Member, FGB, commented: “First Gulf Bank is actively expanding its geographical footprint in strategic markets. Our existing international network continues to increase its contribution to our group’s net profits. We are always looking at the best investment opportunities, building on the strong synergies between our local and international businesses.”
Balance Sheet Liquidity:
During Q1 2012, FGB focused on efficiently managing its excess of liquidity in order to bring it to appropriate levels. Liquid Assets to Total Assets ratio was at 14.7% compared to 13.9% by end of year 2011. While Loan to Deposit Ratio was at 101%, the Central Bank Advance to Stable Deposit Ratio was at a comfortable level of 86.8%. These strong liquidity ratios were coupled with a relatively high Return On Average Assets of 2.4% which is always higher than FGB peer group of large UAE banks.,
Furthermore during the first quarter of 2012, FGB has also received excellent investor endorsement from the region, Europe and Asia, through a 2.8 times oversubscription of its 5 year USD 500 million Sukuk (Islamic bonds) issuance.
Capitalisation and Earnings per Share:
By the end of March 2012, Total Shareholders’ Equity stood at AED 26 billion, and Capital Adequacy Ratio was at 21.2%.The Earnings per Share for the first three months of 2012 at AED 0.30 was 11% higher than AED 0.27 for the same period last year.
The earnings per share reflect the new number of outstanding shares at 3 billion. In effect, the number of shares has doubled during the quarter following the General Assembly of Shareholders’ decision in February 2012 to grant 100% bonus shares to all its shareholders. This was in addition to the AED 1.5 billion cash dividend distribution being 100% of capital which is materialising in one dirham cash grant per share.
These distributions were the highest ever in the history of FGB and in the whole UAE banking sector.
Abdulhamid Saeed, stated: “These distributions were in line with the bank’s commitment to always provide the best returns possible for its shareholders. Our strategy for the future will focus on strengthening our customers’ relationships and on building a strong brand position. We will continue to work towards maintaining a top leading position in the financial industry and on maximising returns to all stakeholders.”
Asset quality and Provisioning:
The Asset quality was stable during the first quarter of 2012. The ratio of Non Performing Loans (NPLs) to Gross Loans was at 3.5%. The same ratio was at 3.4% by end of December 2011 and 3.7% by end of March 2011.
“We have also improved our Provision Coverage Ratio, which exceeded 100% and stood at 102% by end of March 2012 comparing to 98% by end of December 2011 and 97% by end of March 2011. Bearing in mind, that the collaterals held by the bank against its loan portfolio are over and above the coverage ratio, without factoring the exposure to Dubai Holding which is still under restructuring, the asset quality has stabilized and we are comfortable with these levels of provisioning,” said Sayegh.
Andre’ Sayegh concluded: “Through building specialization and Synergy within our various businesses, with powerful stakeholders and with strong guidance from our Board of Directors, we are confident to continue the growth journey, build further strength and achieve the targeted results for First Gulf Bank. In addition to winning a number of awards and recognitions this year, FGB was reaffirmed with an A+/stable outlook by Fitch earlier this month, which symbolizes the positive note that the financial industry shares in our future potential.”