NBAD announced net profits of AED 601 million in the first quarter of 2007 compared to AED 631 million in the first quarter of 2006. Annualised earnings per share were AED 1.51 (restated for the 30% bonus shares). The annualised return on equity at 27.2% is ahead of the medium term target of 25%.
“NBAD’s first quarter results reflect the strong core performance of NBAD”, said Michael H. Tomalin, Chief Executive of NBAD. “Despite quiet equity market giving no impetus to our asset management, equity broking or securities services businesses this quarter, fees and non-interest income increased in the first quarter of this year. Core earnings are growing firmly reflecting the continued focus on diversifying income sources and the growth in our business in the UAE and internationally”, Tomalin added.
Operating income increased from AED 802 million in the first quarter of 2006 to AED 839 million. The core growth in operating income is 20% if the IPO related income of some AED 100 million in first quarter 2006 is excluded. Net interest income increased from AED 515 million to AED 540 and fees and other non interest income increased to AED 299 million as compared to AED 287 Million in the first quarter of last year. Operating expenses rose to AED 225 million reflecting our continued investment in our network, processes, products and people. We continue to invest in training and developing our people and endeavor to make NBAD the employer of choice to attract and retain the most talented UAE nationals. We contribute to humanitarian and green causes and remain committed to a cleaner environment where we live and work. The cost income ratio at 26.8% is well below our medium term target of 35%.
All the businesses performed well with the operating profits of Domestic Banking reaching AED 315 million, International Banking reaching AED 105 million and Investment Banking businesses contributing AED 156 million with our new private banking business contributing AED 3 million. Head office, which is run like a business, did well with profits of AED 35 million.
Business volumes continued to grow with total assets reaching AED 112 billion at the end of the first quarter compared with AED 143 billion in the first quarter of last year, which was flattered by AED 49 billion of short term IPO loans included in loans and advances and sundry creditors. Excluding the impact of these IPO loans, total assets were 19% higher. Loans were AED 61 billion and deposits AED 71 billion. We raised an additional AED 3.3 billion and AED 1.1 billion under the EMTN and ECP programmes. We remain net lenders in the inter-bank market with due from banks and due to banks at AED 21 billion and AED 11 billion respectively.
Capital resources of the Bank reached AED11.6 billion on 31 March 2007 including AED2.5 billion of tier 2 capital and after paying the 2006 cash dividend.
There were no new net provisions created in the first quarter of 2007 compared to AED 6 million in the first quarter of 2006. Specific and collective provisions held reflect our relatively conservative credit strategy and the quality of our assets. As at 31 March 2007, impaired assets were more than 100% covered by the provisions held. AED13 million was provided for overseas tax.
Commenting on prospects for 2007, Tomalin said: “2007 will be a challenging year and the first quarter results of 2007 did not benefit from local stock market activity. The underlying profits of the bank continue to grow positively and we remain well positioned to take advantage of any stock market upswing and the growth opportunities in Abu Dhabi, the UAE and the region more widely.”
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