Classifieds powered by Gulf News

Core operations drive First Gulf Bank net profit

Revenue in 2010 grew 2% year-on-year to Dh6.31b

Strong revenue growth
Image Credit: Javed Nawab/Gulf News Archive
The First Gulf Bank branch in Bur Dubai. Net interest and income from Islamic financingwere the major contributors to the bank’s bottom line.
Gulf News

Abu Dhabi: The Abu Dhabi-listed First Gulf Bank (FGB) said yesterday its net profit for the fiscal fourth quarter ended December rose one per cent year on year to Dh865 million.

Net interest and income from Islamic financing were the major contributors to the bottom line.

FGB in a statement reported a net profit of Dh3.42 billion for full year 2010, a three per cent increase on the year "led by strong revenue growth in core banking operations".

The bank's revenue in 2010 grew two per cent year-on-year to Dh6.31 billion.

Jaap Meijer, head of the bank research team at Dubai-based AlembicHC in an e-mail to Gulf News said that FGB's financial results beat their estimates due to lower loan-loss provisions and the non-performing loan increase being well contained.

"First Gulf Bank… FY net profit of Dh3,420 million…(was) 12 per cent higher than our forecast, due to lower than expected loan losses," said Meijer.

FGB's shares on the Abu Dhabi Securities Exchange (ADX) closed unchanged at Dh16.55 yesterday.

"Consistency in financial performance in terms of positive growth in profitability, revenues, solid balance sheet ratios such as liquidity, capital adequacy and most importantly the strength of its core banking operations, added to the gains made during 2010," said an FGB spokesman.

"Growth in profitability combined with strong balance sheet position and ratios remain the core of First Gulf Bank's financial model.

"Our policy favours a prudent and gradual overseas expansion," CEO André Sayegh was quoted in the statement as saying.

The bank's board of directors have recommended the distribution of a cash dividend 60 per cent of capital or Dh0.60 per share, said FGB, adding this was over and above the proposal made during the meeting on January 6 to distribute 75 million bonus shares to the shareholders.

During the fourth quarter, net interest and income from Islamic financing were at Dh1.105 billion, which was three per cent higher than the previous quarter and nine per cent higher than the fourth quarter of 2009, said FGB.

Corporate and retail fees and commissions at Dh336 million were 24 per cent higher than the same quarter of 2009, it added.

FGB said the balance sheet by the end of 2010 showed a comfortable liquidity position. The liquid assets ratio increased to 13.4 per cent, up from 8.1 per cent at the end of 2009.

"The loan to deposit ratio was at 96.8 per cent by the end of 2010, compared to 104.6 per cent by end of 2009; the result of an increase in customer deposits by 14 per cent against a conservative increase in loans and advances by six per cent during the year 2010. This lead to a significant improvement of the liquidity position of the bank," FGB added

By the end of 2010, FGB's non-performing loans (NPLs) to gross loans ratio stood at 3.7 per cent compared to 3.3 per cent at the end of 2009.

The provision coverage ratio was at 89.4 per cent against 81.7 per cent at the end of 2009, the bank added.