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CBD net profit increases 2.2%

Focus on family-owned companies and affluent individuals helps bank keep strong portfolio

Gulf News

Dubai: Commercial Bank of Dubai (CBD) yesterday reported a net profit of Dh821 million for 2010, up 2.2 per cent over the Dh803 million earned in 2009.

"As a result of the bank's focus on family-owned companies and affluent individuals, the quality of our credit portfolio remains strong. Our profitability ratios are among the highest in the UAE banking sector," said Peter Baltussen, Chief Executive Officer of CBD.

For the fourth quarter of last year the bank's net profit was up 7.7 per cent from the same period in 2009.

Total income for 2010 was Dh1.89 billion, up 6.9 per cent from Dh1.76 billion in 2009. During the year the bank's net interest income increased by 5.2 per cent to Dh1.38 billion. CBD management attributed the growth in interest income to lower funding costs.

Due to lower funding costs, other operating income increased by 12 per cent to Dh505 million.

"Increased revenues combined with continued cost optimisation have resulted in a healthy cost to income ratio of 28.7 per cent," Baltussen said.

The bank reported total assets of Dh38.5 billion, a 4.7 per cent increase over the previous year. Loans and advances stood at Dh27.2 billion, down 4.3 per cent by year-end 2010, while customers' deposits were up 4.6 per cent over last year at Dh29.2 billion by the end of 2010.

"It appears that CBD continued to fortify its balance sheet, resulting in lower lending last year. But it has helped it to improve its liquidity position," said a banking analyst.

CBD reported a strong advance to stable resources ratio of 83.9 per cent at the end of 2010.

"The bank's comfortable liquidity position ensures that we are geared up for growth and able to benefit from the opportunities that the recovering UAE economy is offering," Baltussen said.

The bank currently has a high capital adequacy ratio of 20.28 per cent and a tier adequacy ratio of 15.58 per cent.

CBD's full year impairment charge for the loan portfolio was Dh555 million, including Dh96 million for general provisions, which represents more than 1.4 per cent of the bank's credit risk weighted assets by the end of 2010. The board has proposed a 20 per cent cash dividend subject to agreement by the shareholders at their Annual General Meeting.