Dubai: Commercial Bank International (CBI) on Thursday reported a net loss of 467 million for the full year 2015 from a sharp increase in provisions to Dh840 million as the bank cleaned a huge chunk of legacy impaired assets and nonperforming loans from its balance sheet.
The Abu Dhabi-listed bank implemented a number of measures last year to strengthen its balance sheet through a significant deleveraging of non-core assets including reduction of Dh1.38 billion of legacy non-performing loans.
“It was important for the bank to reduce the legacy non-performing loans to strengthen our balance sheet and move forward. In the process we had to make large provisions resulting in a net loss for the full year,” Mark T. Robinson, CEO of CBI told Gulf News in an interview.
While a large chunk of the accumulated bad loans were linked to real estate sector, Robinson said the bank has been able to recover some portion of these exposures and the remaining were either restructured or written off. “The bottom line is that we have today a much cleaner, leaner and healthier balance sheet,” said Robinson.
At the year-end 2015, CBI’s total assets were at Dh16.48 billion compared to Dh19.68 billion in 2014. Net loans and advances were down to Dh11.51 billion in 2015 compared to Dh13.34 billion at the year-end 2014. Robinson said a conscious effort to clean the balance sheet has seen a decline in total assets, but underlying business performed well last year with customer business up year-on-year.
On the liability side, the bank reported a decline in customer deposits to Dh11.11 billion at year end 2015 compared to Dh14.54 billion at the end of December 2014.
Huge provisioning and deleveraging of legacy NPLs resulted in the bank’s overall NPL’s declining by Dh1.38 billion (58.4 per cent) to Dh983 million at year end 2014. Consequently the NPL ratio improving to 7 per cent at year end 2015 from 13.7 per cent in the comparable period in the previous year and the NPL coverage ratio up to 81.4 per cent in the same period from 60.5 per cent at year-end 2014.
On the funding side the bank raised $125 million last year, improving its capital adequacy ratio. At the end of 2015 capital adequacy ratio was at 14.8 per cent compared to 12.5 per cent in 2014.
Robinson said the bank will continue to strengthen its funding as it expects to expand its balance sheet in a sustainable manner. At the close of last year the bank’s eligible liquidity asset ratio (ELAR) was at 13.6 per cent versus the central bank minimum requirement of 10 per cent.
“Although the operating conditions and the economic environment are challenging, we are comfortable with our balance sheet. Going forward we will be looking at a healthy growth with a mix of both corporate and retail asset classes targeted at delivering value to our shareholders,” said Robinson.
