Dubai: Union National Bank (UNB) yesterday reported a full-year net profit of Dh1.5 billion, up 11 per cent compared to Dh1.35 billion in 2010.
"The solid results for fiscal 2011 are an affirmation of the prudent strategy being pursued by the group focusing on targeted markets and key business segments," said Mohammad Nasr Abdeen, chief executive officer.
The bank's net interest income together with net income from Islamic financing was up 22.5 per cent to Dh2.38 billion in 2011 from Dh1.95 billion.
The increase in net interest income was partly offset by a 25 per cent decline in non-interest income to Dh448.4 million in 2011 from Dh603.9 million the previous year.
UNB attributed the decrease in the non-interest income to the implementation of the Central Bank of regulations governing the lending to individuals and the related fees and commission income that the banks can charge.
"The bank managed to minimise the impact of these regulations by focusing on small and medium enterprise related lending and other profitable segments," the bank said in a statement.
The bank raised general provisions to Dh783 million at the end of last year from Dh472 million the year earlier. Non-performing loans to gross loans ratio was at 3.7 per cent at the end of the year.
"The fourth quarter non-performing loans and advances increased because of "the classification of the bank's exposures to some entities that are part of the Dubai Holding Group and certain other credit exposures," the bank said.
"UNB's results came as a disappointment, varying from our expectations due to higher than anticipated provisions. Provisions relating to Dubai Holding were expected in 2012, an early realisation of which does raise our hopes for better than previously anticipated profits for 2012," said Naveed Ahmad, senior financial analyst at Global Investment House.
The operating profit for the year was Dh2.1 billion an increase of 14.6 per cent.
The operating income for 2011 was Dh2.83 billion, up from Dh2.55 billion.
Loans and advances rose 1.8 per cent to Dh57.6 billion, while customer deposits increased four per cent to Dh60.3 billion.
The credit to deposit ratio improved to 95.5 per cent compared to 97.6 per cent the previous year. "Loans and deposit growth was dampened and while loans moved largely within expectations, we had expected a slight drop in deposits as against an actual increase," said Global Investment House's Ahmad.
The bank maintained a high liquidity position of 19.8 per cent of total assets.
After including investments the stock of liquid assets as a percentage of total assets was 25.9 per cent compared to 26.5 per cent at the end of 2010.
The advances to stable resources ratio was 86 per cent compared to 85.2 per cent in 2010.
Last year Union National Bank repaid its five year syndicated loan facility of $1 billion from its normal sources without resorting to refinancing.
The bank's board has proposed a 15 per cent cash dividend for 2011.
- Dh2.83b: UNB operating income for 2011
- 22.5%: rise in UNB net income from Islamic finance
- Dh2.1b: operating profit for year ending December 2011