Abu Dhabi-based First Gulf Bank (FGB) said yesterday its fiscal second quarter net profit rose 14 per cent on the year to Dh1.02 billion, while its fiscal first half net grew 11 per cent year-on-year at Dh1.95 billion.

“FGB’s strong financial performance was most notably a result of the growth of its loans, where a 6 per cent increase was witnessed in Q2’2012, compared to a flat performance during the previous quarter,” FGB said in a statement.

It said new loans were originated by a diverse clientele base comprising of government-related entities, private corporate, and retail clients, in addition to the multinational customers booked locally and overseas.

FGB said it grew its net interest margin from 3.6 per cent by end of Q1 2012 to 3.8 per cent by end of Q2 2012. The bank’s net interest and Islamic financing income continued to grow in Q2 2012, where it stood at Dh1,350 million, 11 per cent higher than Q2 2011.

“The Core Banking net profits represented 97 per cent of the total net profit of the group including businesses like Corporate, Retail, Treasury and Investments, Financial Institutions, Islamic and International. The remaining 3 per cent was contributed by the subsidiaries and associated companies of the group,” said FGB.

Commenting on FGB’s financial performance, Andre’ Sayegh, FGB’s chief executive said: “Our consistent positive performance stands as a strong undisputed assurance to the effectiveness of our dynamic strategy, which will continue to steer our operations into the coming periods. As the UAE economy continues to pick up momentum, and we witness more favourable market conditions, FGB is committed to uphold its leading position in the local and regional markets alike.” 


Second quarter performance


Analysing FGB’s second quarter performance, Shabbir Malik, banking analyst at EFG-Hermes told Gulf News: “FGB’s second quarter earnings were ahead of our expectations. The positive surprise was their loan growth, which was up 6 per cent quarter-on-quarter.”

He added: “Given that FGB’s second quarter earnings were strong, we think, FGB’s 10 per cent loan growth guidance for 2012 financial year looks achievable. Another interesting aspect of second quarter result was FGB’s net interest margin, which improved quarter-on-quarter.”

Naveed Ahmad, Senior Financial Analyst at Kuwait-based global Financial House said : (FGB’s) asset quality remained largely intact with NPL ratio inching up by just 10bps from 1Q12; though NPL formation could be higher than the previous quarter where the ratio increased by the same amount but loans were stagnant. Provisions nevertheless stood unchanged YoY and QoQ.

“We take the bank’s performance for the quarter in good light and await detailed financials to make further assessment,” said Ahmad.

FGB’s asset quality was stable during the second quarter of 2012. The ratio of Non Performing Loans (NPLs) to gross loans was at 3.6 per cent and provision coverage was set at 92 per cent.

“FGB’s management is satisfied with the stabilisation of NPLs over the past 18 months and is comfortable with this level of coverage. We expect further reductions over the coming years,” said Sayegh.

FGB’s shares on the Abu Dhabi Securities Exchange yesterday rose 0.23 per cent, closing at Dh8.65.