First Gulf Bank, FGB, a leading financial institution in the UAE, continues to register increasing profit rates, where it announced that its Net Profit for Q3’2012 stood at AED 1,054Mn, 15% higher than the same period last year (Q3’2011), and 4 % higher than Q2’2012. This concludes the net profit figure for the first 9 months of 2012 at AED 3,006Mn, 12% higher than same period last year.
One of the most notable areas of growth during Q3’2012 was the increased rate of loans, which rose by 3%, further adding to the growth of 6% which was achieved in H1’2012. The clientele base came from diverse sources, mainly UAE government related entities, retail clients, in addition to clients in the bank’s international locations.
FGB Net Interest Margin stood at 3.71% by end of Q3’2012, compared to 3.75% during the same period last year.
Furthermore, during the quarter, Moody’s affirmed FGB’s long term rating at ‘A2’ with ‘Stable’ outlook.
Q3’2012 Income Statement Highlights
Registering a Net Profit of AED 1,054Mn, FGB’s Q3’2012 profits have grown by 15% in comparison to Q3’2011, and by 4% in comparison to Q2’2012.
Net Interest and Islamic Financing increased to AED 1,405Mn; 4% higher than Q2’2012 and Q3’2011 as well. Furthermore, fees and commissions generated by the Corporate and Retail businesses stood at AED 283Mn which is 8% higher than Q3’2011.
The Core Banking businesses of FGB contributed 97% to Net Profit, while the remaining 3% were contributed by the subsidiaries and associated companies of the group.
Commenting on FGB’s outstanding performance, Andre’ Sayegh, CEO of FGB, said: “The solid financial performance during the first half of 2012 and throughout the third quarter is a reflection of the UAE’s growing economy as well as our consistent and balanced internal business strategy, which revolves around balance sheet strength, adequate liquidity and business diversification locally and overseas. From this angle, we continue to target and focus on selective new businesses which fit our criteria , whilst ensuring that we continue to develop our existing operations locally and in selective international locations.”
Performance for the First Nine Months of 2012
Continuing to maintain its leading position in the market, FGB scored a Net Profit at AED 3,006Mn for the first nine months of 2012, 12% higher than same period last year. The group’s expenses totalled AED 1,025Mn for the first nine months of 2012, 16% higher than the same period last year. On the other hand, cost to income ratio was maintained at 19.5%, which is the lowest in the banking industry, displaying FGB’s efficient management. Furthermore, Loans and Advances grew by 9% during the first 9 months of the year and 12% during the past 12 month period.
Abdulhamid Saeed, FGB Managing Director and Board Member, commented: “FGB has yet again attained record profit rates due to our strong liquidity and capital position, in addition to our prudent risk management practices. As we move forward into the remainder of 2012 and onwards, we aim to continue implementing our strategy of enhancing local and international operations to ensure the best returns for all our stakeholders.”
Balance Sheet – Liquidity
During Q3’2012, FGB’s strategy to maintain its strong position through adopting wise management policies showed noticeable results, where there was an overall improvement in the liquidity rates on the bank. Loan to deposits ratio stood at 104% at the end of this period, which was lower than the registered number at the end of Q2’2012- 106%. The regulatory advance to stable deposit ratio of 86% was lower as well, compared to the 89% recorded by end of previous quarter.
“In line with our strategy, liquidity will always remain FGB’s primary foundation. Our liquidity structure is based on a validated model, which is well positioned to cope with liquidity requirements at the same time is very well placed to meet business growth, both locally and internationally,” said Sayegh.
FGB continued to carry out successful medium term funding transactions and early October this year, the bank concluded a USD 650 million 5-year Euro Medium Term Note (EMTN) conventional Bonds issuance. It was 4 times oversubscribed and the fixed coupon rate was closed at 2.862%.
Capitalisation and Earnings per Share
By the end of Q3’2012, Total Shareholders’ Equity stands at around AED 28Bn, and Capital Adequacy Ratio at 22.4% including a Tier 1 Ratio of 19.8%. The Earnings per Share for the first nine months of 2012 is AED 0.95 which is 14% higher than AED 0.83 for the same period in 2011.
Abdulhamid Saeed stated: “One of the main propellers for FGB’s superior financial performance is the continuous success of our funding transactions and the growing demand on our share. We are providing steady returns and FGB has consistently been paying cash dividend without interruption since the year 2000. FGB has paid in 2012 the highest cash dividend for its shareholders than any other bank in the UAE.”
Asset quality and Provisioning
The Asset quality was stable during the third quarter of 2012. The ratio of Non Performing Loans (NPLs) to Gross Loans stood at 3.5% by end of Q3’2012 slightly down from 3.6% by end of Q2’2012. Provision coverage was at 89%.
“FGB’s management is satisfied with the asset quality level and the stabilization of the NPLs over the past couple of years. In fact, with our professional and dedicated collection and restructuring team we are confident to bring these levels down over the coming quarters. Since FGB’s application of the 2010 UAE Central Bank circular on reporting the NPLs at 90 days instead of 180 days, the ratio of NPLs to Gross Loans, has ranged between 3.7% and 3.4%,” said Sayegh.
Sayegh commented: “FGB has been internationally recognised for its leading stature in the banking sector, where it received recently the ‘Best Islamic Deal in the United Arab Emirates’ award by The Asset Magazine for its stellar USD 650 million Sukuk (Islamic bonds) issuance in August 2011. Earlier this year, leading financial publication Euromoney also named FGB “Best Bank in the UAE” during its Awards for Excellence – Middle East 2012 Ceremony.”
He concluded: “FGB continues to maintain its leading standing in the local and regional markets, both in terms of financial performance as well as in term of innovation. We aim to continue to adopt the latest technologies and to provide unique solutions and products for the banking sector, thereby increasing our service offerings locally and overseas.”