Dubai: Commercial Bank of Dubai (CBD) on Sunday reported Dh1 billion net profit for the 2016, 5.9 per cent lower compared to Dh1.07 billion for the previous year. The bank attributed the lower profits to higher provisioning.

The board has recommended 20 per cent cash dividend.

The bank’s operating income increased by 4.7 per cent Dh2.46 billion, mainly due to a 5.2 per cent increase in net interest income to Dh1.73 billion and a 3.5 per cent increase in non-interest income to Dh736.9 million with a 15.2 per cent increase in foreign exchange income.

Operating profit for 2016 increased by 6.6 per cent Dh1.59 billion as compared to Dh1.49 billion in the previous year.

“The operating environment in the UAE was challenging through most of the year yet CBD’s operating profit increased more than 6 per cent. Marginal decreases in the corporate and commercial segments’ revenues were offset by growth in the personal and business segments validating the bank’s diversification strategy,” said Dr. Bernd van Linder, Chief Executive Officer of CBD.

Total assets of Dh64.1 billion were 10.7 per cent higher when compared to the Dh57.9 billion as at the year-end 2015. Loans and advances were higher 7.5 per cent year on year to Dh42 billion.

Customer deposits

Loan book growth was across all business segments. Personal and business banking net loans at Dh7.2 billion; registered an increase of 7.8 per cent compared to the Dh6.7 billion at year end 2015. Corporate and commercial banking net loans were up 7.4 per cent in 2016.

Customers’ deposits of Dh43.8 billion in 2016, increased by 8.2 per cent compared to Dh40.5 billion as at the previous year end. Current and savings accounts (CASA) balances increased by Dh1.9 billion, 11.3 per cent representing 43.9 per cent of the total deposits, while loans to deposits ratio stood at 95.9 per cent.

The bank’s asset quality remained sound, in spite of volatile market conditions. The non-performing loans ratio was flat 6.9 per cent at year-end 2016 compared to the same period last year whilst loan loss coverage ratio increased to 101.6 per cent from 92.4 per cent at year-end 2015.

Additional net impairment provisions of Dh588.4 million were set aside during the year compared to Dh427.2 million for the previous year. This includes Dh93 million for general provisions, as a result of the growth of the balance sheet.

CBD’s liquidity position continued to be comfortable with advance to stable resources ratio of 83.7 per cent to the close of 2016 compared to 84.6 per cent in the same period last year. Liquidity coverage ratio calculated as per Basel III guidelines was at 133.9 per cent compared to the minimum stipulated ratio of 70 per cent.

Capital adequacy and Tier 1 capital ratios were at 15.8 per cent and 14.6 per cent respectively at year-end 2016.