Dubai: First Gulf Bank (FGB) on Wednesday reported a net profit of Dh5.66 billion in 2014, up 18 per cent compared to Dh4.77 billion in 2013, marking the 15th consecutive year of net profit growth for the bank.
Revenues were up 10 per cent to Dh9.24 billion for 2014. Net interest and Islamic financing income grew by 8 per cent to Dh6.47 billion. Surplus liquidity in the UAE banking system and increasing competition put pressure on net interest margins (NIMs) and resulted in NIMs contracting by 10 basis points to 3.6 per cent in 2014.
Non-interest income grew 14 per cent in 2014, driven by strong core fee and commission revenue streams and higher foreign exchange and derivatives income.
“FGB’s strong performance throughout last year is a clear testament of our unrelenting commitment to achieve superior financial results and consistently create more value for stakeholders,” said Abdul Hamid Saeed, FGB’s managing director.
Loans and advances increased by 11 per cent last year to Dh139.7 billion. Customer deposits were up 2 per cent year-on-year to Dh141.3 billion, leading to a loan-to-deposit ratio of 98.9 per cent, against 91 per cent in 2013. Advances to stable deposits ratio remained at 83.5 per cent.
The bank’s asset quality metrics continued to improve with the non-performing loans (NPL) ratio at 2.5 per cent in 2014 from 3.3 per cent in the previous year. In parallel, NPL provision coverage was significantly enhanced to 126.7 per cent. The full-year loan provision charge amounted to Dh1.36 billion, down 23 per cent from Dh1.76 billion in 2013.
“2014 was an important turnaround year for FGB as the bank started reaping the benefits of its new business model in line with the strategy laid out almost two years ago,” said André Sayegh, CEO of FGB. “Much focus has been put into enhancing our product range, introducing greater specialisation across our core business segments, and implementing stronger cross-business synergies.”
The bank’s capital base remained robust with a Capital Adequacy Ratio (CAR) of 17.5 per cent and Tier-1 capital of 16.2 per cent after dividend distribution. Earnings per share (EPS) increased by 22 per cent year-on-year to Dh1.42.
FGB’s board has recommended the distribution of 100 per cent cash dividends and 15.38 per cent bonus shares for 2014. Cash dividends represent 69 per cent of full-year net profits against 63 per cent in 2013.
The bank expects growth to be stable this year despite the oil market volatility.
“We strongly believe that the UAE economy is fundamentally solid enough to absorb the impacts of acute volatility in the commodities market, even in the case of a prolonged downturn. The competitiveness and strength of the UAE economy go far beyond the price of the barrel of oil,” Sayegh said.
