National Bank of Abu Dhabi (NBAD) recorded net profits of AED 914 million in the third quarter of 2009, an increase of 41% compared with AED 651 million for the third quarter of 2008. Cumulative profits for the nine months amounted to AED 2,591 million, 2.5% up on the comparable period of 2008 and representing an annualised EPS of AED 1.53 compared with the previous corresponding period of AED 1.51. Annualised return on equity (ROE) was 22.5% and in line with NBAD's target of 20% for the current year.
Net impairment charges for the quarter were AED 284 million of which collective provisions were AED 142 million, specific provisions and write-off charges were AED 180 million, mitigated by recoveries of AED 38 million. Total provisions for non-performing assets reached AED 2,254 million of which AED 1,288 million were collective and AED 966 million were specific.
Impaired assets increased by AED 219 million in the quarter totaling AED 1,541 million. The Non-performing loans ratio stood at 1.2% with a coverage of 146%.
H.E. Nasser Ahmed Khalifa Alsowaidi, Chairman of NBAD said, “The UAE banking sector remains stable assisted by a proactive regulatory framework that has contributed to the resilience of the banking system under the present tough global financial conditions. NBAD’s robust risk management practices and no exposure to exotic products in its banking model reflect the prudence of the bank’s risk strategy and the quality of its banking businesses.”
Total assets amounted to AED 186 billion at the end of the 3rd quarter 2009, up from AED165 billion as at 31 December 2008. For the first time in the history of the bank, assets exceeded US$50 billion. Customer deposits increased by 6.8% and loans by 14.7% compared with 31 December 2008.
Capital resources, including the AED 4.0 billion of Abu Dhabi Government Tier I capital and AED 2.8 billion subordinated convertible notes reached AED 23.1 billion, up 33% from AED 17.4 billion compared with 31 December 2008. As at 30 September 2009, the Basel II capital adequacy ratio was 18.4% and the Tier I capital ratio 15.7%.
At the beginning of September 2009, NBAD issued a 5-year Medium Term Note for US$ 850 million under its EMTN Programme. The transaction book order was 4.8 times oversubscribed with a broad global range of investors. NBAD was the first bank in the region to tap the market and the coupon was 4.5% fixed. During the same month, NBAD also issued Medium Term Notes totalling HK$ 1,023 million, or US$ 132 million equivalent, in three separate private placements.
Better margins, more business and funding cost management led to a 36.7% improvement in net interest income of AED 3,343 million for the nine months of 2009 compared with AED 2,445 million for the corresponding period of 2008. For the nine month period, fees and commissions and other non-interest income were slightly lower by 3.7% at AED 1,452 million from AED 1,508 million, but 43% higher at AED 528 million for the third quarter 2009 compared with the third quarter 2008.
Operating expenses for the nine months rose by 30%, which resulted in a cost income ratio of 28.5% compared with 26.5% for the nine months of 2008, below our cap of 35%. Operating expenses growth reflects the ongoing disciplined investment in our franchise, people, network and infrastructure as we expand organically throughout the region.
Operating profits from the Group’s divisions for the nine months of 2009 were AED 3,431 million. Domestic Banking’s (comprising consumer, commercial and elite banking) operating profits of AED 654 million represented 19% of NBAD’s operating income. Financial Markets contributed AED 686 million or 20%; International Banking’s profit contribution was 12% or AED 407 million and Corporate & Investment Banking’s contribution totaled AED 1,495 million or 44%. Islamic business earned AED 40 million and Global Wealth AED 21 million a combined contribution of 1.8%. Head Office is run like a business and contributed AED 128 million before any collective provisions which are carried centrally in the Group’s head office account.
Chief Executive Michael Tomalin said, “For the first time this year, we are ahead of historic 2008 earnings comparables. Nevertheless, we have again, in this quarter, been able to make substantial voluntary collective provision to put us in a strong position to face any credit challenges ahead.”
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