Dubai: Union National Bank Group (UNB) on Tuesday reported a net profit of Dh2.02 billion in 2014, up 16 per cent compared to 2013.

For the fourth quarter of 2014, the bank’s net profits were up 42 per cent to Dh436 million compared to Dh306 million reported in the same quarter in 2013.

“The UNB Group surpassed a major profit milestone, with the Group’s profit for the full year exceeding Dh2 billion for the first time. The consistent growth in underlying business, focused strategy and our deep commitment to all our stakeholders has ensured that the UNB Group continues to grow its business and franchise,” said Mohammad Nasr Abdeen, Chief Executive Officer, Union National Bank.

UNB’s operating profit for 2014 grew 8 per cent to Dh2.54 billion compared to Dh2.35 billion in the previous year. While the operating income for 2014 increased by 9 per cent to Dh3.5 billion, the operating income for the fourth quarter of the year grew strongly by 29 per cent to Dh969 million.

The net interest income and net income from Islamic financing for 2014 was up by a modest 3 per cent to Dh2.67 compared to Dh2.60 billion. The bank attributed to competitive pricing pressures to a decline of in net interest margin in 2014.

The non-interest income in 2014 increased by 36 per cent to Dh831 million and was up by 90 per cent in fourth quarter of 2014 as compared to same quarter of prior year. The increase in non-interest income for 2014 was principally driven by an increase in net fees and commission income which was up by 27 per cent at Dh638 million at year end 2014.

UNB’s total assets grew 7 per cent last year to Dh93.5 billion as loans and advances increased by 7 per cent to Dh64.1 billion compared to Dh60 billion at the year-end 2013. The investment portfolio of the group increased 47 per cent to Dh11.6 billion at the close of 2014. The increase in investment portfolio comprises of high quality fixed income issuances by regional and local issuers.

On asset quality front the bank reported significant improvements last year with non-performing loans to gross loans and advances ratio improving by 50 basis points in 2014 to 3.8 per cent. The loan loss coverage ratio further strengthened to 97.2 per cent. The improving asset quality metrics, led to the impairment charge decreasing by 16 per cent to Dh492 million for 2014 compare to Dh586 million in 2013.

The bank’s liquid assets, including investments constituted 26.8 per cent of the total assets at the year-end 2014. Customers’ deposits recorded a growth of 4 per cent last year to Dh67.4 billion and the credit to deposit ratio was 95.1 per cent at the close of 2014.

In line with the strong profitability, the return on average equity, excluding Tier 1 capital notes was 14.3 per cent for 2014 compared to 13.9 per cent in the previous year and the return on average assets was 2.2 per cent for 2014 against 2 per cent in 2013. The capital adequacy ratios remained strong at 19.9 per cent with tier 1 ratio at 18.7 per cent at the close of 2014. The board has recommended a dividend distribution of 25 per cent (Dh0.25 per share) as cash dividend.