National Bank of Abu Dhabi (NBAD) earned net profits of AED 2,032 million, 21.1% up compared with AED 1,677 million in June 2009. Net profits for the second quarter were AED 1,001 million, up 10.4% on AED 907 million achieved in the corresponding quarter of 2009.
The Chairman of NBAD Mr. Nasser Ahmed Khalifa Alsowaidi said, “In spite of the challenging market conditions, NBAD posted solid financial results for the second quarter and first half of 2010. The Group continues to benefit from its strategy of diversified income sources, continuous investment in its franchise, robust risk management and focusing on relationships.”
Total assets of AED 202 billion as at 30 June 2010, were 11.4% higher than 30 June 2009 and 2.5% up on 31 December 2009. Deposits were at AED 112.2 billion as at 30 June 2010 after reclassifying the AED 5.6 billion Ministry of Finance deposits to Tier 2 capital in 2010, compared with AED 111.7 billion as at 30 June 2009 which included the Ministry of Finance deposit. Loans and advances to customers grew by 8.7% to AED 135 billion from AED 124 billion in the corresponding period.
Underlying performance of the loan book remains high. Collective provision of AED 1,685 million continues to be maintained at 1.25% of credit risk weighted assets. As at 30 June 2010, NPLs were 147% covered and specific provision cover was at 66%.
Non-performing loans in the six months of 2010 increased by AED 386 million to AED 2,073 million on a portfolio of AED 135 billion, representing an NPL ratio of 1.5%. Net impairment charge was AED 238 million in the second quarter and AED 463 million in the first half of 2010.
A comfortable liquidity position was maintained during first half of 2010. On 29 June 2010, NBAD successfully issued its first Islamic bond denominated in Malaysian ringgit (MYR). The five-year MYR 500 million (US$155.9 million) Sukuk was four times oversubscribed. This not only diversifies NBAD’s funding sources among a wide investor base, but also extends the duration of our liabilities.
As at 30 June 2010, capital resources remained at a solid position at AED 30.7 billion, 40.2% up on AED 21.9 billion at the end of June 2009. Total capital adequacy ratio on Basel II principles increased to 21.8% from 17.9% a year earlier and the Tier-I capital ratio was at 15.5% as at 30 June 2010.
Net interest margins for the first half of 2010 were at 2.53% slightly above the 2.50% for the corresponding period in 2009.
Operating income reached AED 3.5 billion, 14.9% up compared with AED 3.1 billion in June 2009. Net interest income for the first half rose 16.3% to AED 2.5 billion compared with corresponding period in 2009; fees and other non-interest income increased by 11.6% to AED 1,032 million in the first half of 2010 compared with the first half of 2009.
Operating expenses in the first half of 2010 increased by 15.2% to AED 1,004 million compared with the corresponding period. The Bank continued its organic growth strategy in the first six months of 2010 by opening six new branches and cash offices in the UAE, a branch in Jordan and another new branch in Oman bringing the total to eight branches in the Sultanate of Oman.
The cost to income ratio of 28.3% is still low by international standards and lower than the 35% cap on the cost to income ratio the Group expects to be maintained in the medium term.
The Group’s annualised return on shareholders’ funds was 23.4% for the half-year, above the 20% objective for 2010 and consistent with NBAD’s medium-term strategic objective of maintaining an average return of 25%.
All NBAD’s businesses performed well in subdued market conditions, contributing operating profits of AED 2.5 billion for the first half of 2010 and reflecting a 14.8% growth over the corresponding period in 2009. Domestic Banking earnings of AED 566 million represented 22.2% of operating profits; Financial Market’s performance of AED 396 million contributed 15.6%; International Banking delivered AED 289 million, representing a 11.4% contribution; Corporate and Investment Banking contributed 48.4% or AED 1,232 million. Contributions from Global Wealth and Islamic Banking totalled AED 56 million or 2.2%.
On 20 June, NBAD was one of five international banks to be granted a commercial banking license in Malaysia by Bank Negara. Malaysia.
NBAD’s long-term ratings were affirmed by the credit rating agencies, with Moody’s Aa3, Standard & Poor's A+ and Fitch AA-. In addition, NBAD was assigned long-term AAA and short-term P1 rating by Rating Agency Malaysia (RAM) during the period under review.
Mr. Michael Tomalin, the Group Chief Executive of NBAD, said, “These are a strong set of results in difficult markets reflecting the resilience and strength of the bank.”
