Dubai: Commercial Bank International (CBI) reported a net profit of Dh36.5 million for the first quarter of 2016, after going through an extensive balance sheet restructuring last year.
The first quarter marks bank’s return to profits after it reported a net loss of Dh467 million for the full year 2015.
Starting the year with a cleaner and leaner balance sheet, the bank reported strong growth in loans and deposits. A few hours ahead of the first quarter result announcement, the bank received A- (A minus) rating (investment grade) with stable outlook from rating agency Fitch.
In the first quarter of 2016, the bank’s net loans and advances increased 6 per cent (Dh703 million) to Dh12.2 billion compared to Dh11.5 billion in December 2015, well above reported market growth of 1.3 per cent.
“In terms of asset quality, today, we are in a much stronger position. With most of the legacy non-performing loans (NPL) taken out of the balance sheet, our NPLs and NPL ratio have improved significantly in the first quarter,” Mark T. Robinson, CEO of CBI said in an interview.
In the first quarter of this year, the bank reported that its non-performing loans (NPLs) dropped by 12 per cent to Dh869 million from Dh983 million in December 2015. As a result, the bank reported an improved NPL ratio of 5.9 per cent from 7 per cent down 115 basis points from December 2015 and an NPL coverage ratio of 89.2 per cent up 7.8 per cent from 81.4 per cent at year-end 2015.
Robinson said recoveries of some of the legacy loans have helped the performance in the first quarter and the bank expects some more recoveries to come through in the next few quarters.
“We will continue to pursue these loans although provisions have been made against these. We do expect these recoveries will help our performance in the next few quarters,” he said
CBI’s capital adequacy remained stable at 14.5 per cent, versus 14.8 per cent in December 2015, and above the minimum required. Liquidity continues to be in excess of the regulatory requirements.
Customer deposits increased by 6 per cent to Dh11.78 billion from Dh11.1 billion in December 2015, significantly ahead of the market which was flat for the period. Revenue for the quarter was Dh186.7 million, slightly down from The first quarter of 2015 mainly due to the one off revenues from the sales of non-core assets in The first quarter of 2015.
CBI’s expenses of Dh105.4 were up 3.5 per cent compared to The first quarter of 2015. The bank is currently investing in staff and technology to improve its retail offering.
With the overall liquidity situation in the market becoming tight, Robinson expects, CBI’s stronger balance sheet and an improved credit rating will help it attract deposits at better price. “The rating from Fitch comes at an important time for CBI because it accelerates our growth strategy in several ways, including providing access to a bigger pool of potential investors and a reduced cost of funds,” he said.
