Business | Banking
NBF slips into red in third quarter
National Bank of Fujairah has reported a net loss of Dh86.5 million in the third quarter, compared to a profit of Dh76 million reported in the corresponding period last year.
- Staff Report
- Published: 23:32 November 5, 2008
Dubai: National Bank of Fujairah has reported a net loss of Dh86.5 million in the third quarter, compared to a profit of Dh76 million reported in the corresponding period last year.
For the first nine months of the year ended September 30, the bank has reported a net profit of Dh67 million compared to the corresponding period profit of Dh228.9 million in 2007.
The bank said yesterday that its third quarter results were impacted by international market conditions. Investment fair value decline in the quarter was Dh133 million, of which Dh109.5 million was recognised through the profit and loss compared to investment income of Dh55.4 million for the corresponding quarter of 2007. An additional impairment loss of Dh69.7 million has been recognised in respect of credit exposures impairment caused by the current market conditions.
"The underlying core business growth continues to be robust whilst the net results for the nine-month period to September 30 2008 were impacted by global market conditions. Core operating income for three months and nine months ended September 2008 grew by 52 per cent and 44 per cent respectively over corresponding periods of 2007. NBF has been prudent in providing for potential impairment losses against credit exposures given current market conditions," said CEO Steve Mullins.
Operating income
For the nine months period, core operating income, excluding investment fair values, showed a growth of 44.4 per cent compared to the corresponding period of 2007. Core businesses maintained strong growth on the back of volumes despite pressure on margins. Net interest income rose by 39.36 per cent and fee income grew by 40.72 per cent.
NBF's foreign exchange income doubled to Dh30.75 million compared to the corresponding period of 2007. "NBF's liquidity and capital adequacy ratios have been strengthened during the quarter on the back of subordinated debt of Dh400 million and a new syndicated loan facility of $210 million equivalent, which replaced the previous facility of $130 million. This new funding supported the bank in managing liquidity better during difficult market conditions and NBF remained in compliance with Central Bank regulatory ratios" added Mullins.
Total assets of Dh13.76 billion grew by 34.34 per cent over 30 September 2007. Total shareholders' equity as of September 30, 2008 stood at Dh1.68 billion and the bank's capital adequacy ratio at period end stood at 15.5 per cent against the Central Bank minimum of 10.
Operating expenses rose by 34.89 per cent largely due to investment in governance and infrastructure and strengthening human capital. Cost to income ratio was 51.82 per cent compared to 31.89 per cent in the corresponding quarter of 2007 which reflects lower earning levels; however, adjusted for loss/income from investments, the ratio would be 35.56 per cent and 38.06 per cent for respective periods, in line with management expectations.
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