NBAD earns net profits AED1,953 million in H1 2011

The National Bank of Abu Dhabi (NBAD) increased its net profits 2.5% to AED 1,026 million for the second quarter of 2011 compared with AED 1,001 million earned in the second quarter of 2010. 

Net profits for the first half of 2011 at AED 1,953 million were lower by 3.9% compared to the first half of the previous year at AED 2,032 million. The annualised return on shareholders’ funds for the first half is 17.7% in line with the target for 2011. 

H.E. Nasser AlSowaidi, the Chairman of NBAD Board of Directors, said: “Longer term prospects for the Bank remain clear and bright as we continue to implement our strategies which are aligned with the growth of Abu Dhabi and UAE and continue with our prudent underwriting policies.” 

Mr. Michael Tomalin, the Group Chief Executive of NBAD, commented: “Our focus remains on top-line operating revenues which are up 10% year on year. Given the weak global economy and some regional uncertainty, low interest rates and absence of any major exceptional items, this increase can be judged a fine achievement.” 

Total Assets reached AED 246.5 billion as at 30 June 2011, 16.6% up on 31 December 2010 and 22.2% up on 30 June 2010, mainly driven by the growth in customer deposits. Loans and advances to customer increased to AED 153 billion, up 11.8% on 31 December 2010 and 13.3% up on 30 June 2010.

Customer deposits at AED 147.2 billion were up 19.5% from the year end and by 31.2% compared to 30 June 2010. 

The gross impairment charge for the first half was AED 848 million, which after AED 152 million of recoveries reduced to a net charge of AED 696 million, comprising of collective provisions of AED 170 million, net specific charges of AED 481 million and other provisions for impaired assets of AED 45 million. Our collective provision of AED 2,062 million is 1.39% of the credit risk-weighted assets, in line with Central Bank’s requirement for banks to have a collective provision of 1.5% of credit risk-weighted assets by the end of 2014. Collective provisions alone rose by AED 170 million in the first half of this year (AED 86 million in the second quarter) to keep pace with the growth in the business. 

Non-performing loans increased to AED 4,172 million representing 2.65% of the loan book. 

Capital resources stood at AED 33.7 billion after dividend payments of AED 120 million on Government of Abu Dhabi (GoAD) Tier-I capital notes and AED 718 million to shareholders as a cash dividend in the first half of 2011. Capital resources consist of shareholders’ funds of AED 21.3 billion, GoAD Tier-I capital notes of AED 4 billion and subordinated notes of AED 8.4 billion. Our capital adequacy ratios remain well above the minimum required by the UAE Central Bank and Basle-3 with a capital adequacy ratio of 21% and a Tier-I ratio of 15% as at 30 June 2011. 

Operating income for the first half increased 10% to AED 3,888 million, compared with AED 3,548 million for the corresponding period of 2010. Second quarter’s operating income at AED 2,007 million is higher by 13% when compared to the second quarter of 2010. Net interest income and net income from Islamic financing contracts for the first half rose 13% to AED 2,854 million compared with corresponding period of 2010 while non-interest income was marginally higher at AED 1,035 million. 

Net interest margin was 2.49% for the first half of 2011, but lower as compared to 2.53% for the comparable period of 2010. 

Operating expenses for the first half were AED 1,188 million, higher by 18% compared with the corresponding period of 2010. 

The cost to income ratio was 30.5% for the first half of 2011. The ratio remains below the Group’s medium-term cap of 35%. 

All the Group’s businesses delivered good performances in challenging market conditions, contributing operating profits of AED 2,701 million for the first half. 

Corporate and Investment Banking earned AED 1,235 million, contributing 45.7% of operating profits; Domestic Banking earnings of AED 565 million represented 20.9%; Financial Market’s performance of AED 396 million contributed 14.7%; International Banking delivered AED 349 million, representing 12.9% contribution; Islamic Banking totaled AED 83 million or 3.1%; and Contributions from Global Wealth totaled AED 32 million, representing 1.2%. 

During the second quarter, NBAD launched its second branch in Wadi Abdoun, Jordan and its fourth Business Banking centre in UAE (second in Dubai) in its ongoing effort to expand its services to small- and medium-sized enterprises (SMEs). 

The Bank launched innovative new products and services during the quarter, like the Visa Business Credit Card, Business Rent Finance for SMEs and NBAD One – a premier current account service among others. 

NBAD continued to collect outstanding accolades and recognitions. Euromoney Awards for Excellence, regarded as the benchmark awards for financial services globally, rated NBAD the Best Bank in the UAE. This is the fifth time in 10 years and the third consecutive year that NBAD has won this title. NBAD was named the Bank with the Best Risk Management in the MENA and the Best Bank in the UAE at the Bankers’ Middle East Industry Awards for Excellence 2011. 

In addition to receiving the Best Corporate Social Responsibility programme by emeafinance, NBAD was the among the 3 MENA banks and the only Middle East bank to be shortlisted for the Financial Times/IFC Sustainable Bank of the Year award. 

In addition to being recognised among the World’s 50 Safest Banks by Global Finance, NBAD’s long term ratings continue to remain amongst the strongest combined ratings of any financial institution in the MENA region with ratings from Moody’s Aa3, Standard & Poor’s A+, Fitch AA-, RAM (Malaysia) AAA and R&I’s (Japan) rating of A+.