Dubai: Union National Bank (UNB) yesterday reported a net profit of Dh1.35 billion last year, up 16.6 per cent compared to Dh1.15 billion reported in 2009.
The bank's operating profit last year was up 25.2 per cent to Dh1.8 billion compared to 1.46 billion in 2009.
Despite the prolonged vulnerability in the market due to the global economic downturn, the bank has been able to deliver good results, the bank said in a statement.
"It is encouraging to note that the financial and business performance of the UNB Group has been satisfactory over the full economic cycle with the group continuing to grow in a measured manner in 2010," said Mohammad Nasr Abdeen, chief executive officer.
Operating income last year stood at Dh2.55 billion, an increase of 20.6 per cent over 2009, led by double digit growth in both net interest income and non-interest income.
Net interest income was up 18.4 per cent to Dh1.95 billion last year compared to Dh1.64 billion in 2009 while non-interest income grew by 28.4 per cent to Dh603.9 million.
The increased net interest income was achieved through higher business volumes and an improved net interest margin.
Fees and commission income increased in 2010 by 25.9 per cent to Dh559.8 million compared to Dh444.6 million the previous year.
As part of its expansion strategy, the bank experienced a 10.2 per cent increase in operating expenses in 2010 to Dh715 million compared to Dh648 million.
"The bank's NPLs fell from 1.5 per cent in 2009 to 1.4 per cent last year . However, including Dubai World, the NPLs would be 4.3 per cent suggesting a Dh1.6bn exposure to Dubai World, slightly less than we had expected," said Jaap Meijer, senior financial analyst at Alembic HC Securities. "Impairments amounted to Dh482m, up 67 per cent , suggesting a loan loss charge off rate of just 90bps, one of the lowest within UAE, 19 per cent below our forecast," he said
Cost efficiency ratio
However, the bank's cost efficiency ratio (cost to income) improved to 28 per cent last year from 30.6 per cent in 2009, well below the group's target medium term range of 30 to 35 per cent. The bank reported a relatively high loan growth last year compared to many other banks.
Loans and advances increased 11.4 per cent to Dh56.6 billion in 2010 compared to Dh51.3 billion in 2009.
On the liability side, the bank's customer deposits grew 13 per cent to Dh57.9 billion last year with the loan to deposit ratio at 97.6 per cent.
- Dh1.8: billion operating profit of UNB last year
- Dh1.95: billion net interest income of bank