Dubai: Commercial Bank of Dubai (CBD) on Wednesday reported net profit of Dh1.16 billion for 2018, up 16 per cent year on year.

For the fourth quarter of 2018, the bank’s net profits rose 13 per cent to Dh319 million, compared to Dh282 million in the same quarter in 2017.

Strong profit growth for the year came on the back of a 3.1 per cent increase in operating income, a 4.7 per cent decline in operating expenses and on lower impairment allowances by 4.8 per cent.

Dh2.72b

Operating income, an increase of 3.1%

Operating income for 2018 amounted to Dh2.72 billion, an increase of 3.1 per cent owing to a 5 per cent increase in net interest income on loan growth while other operating income decreased slightly by 1 per cent.

Within operating income, foreign exchange income registered a 19.8 per cent increase.

Other income increased by 51.3 per cent compared to 2017, and fees and commission income increased by 2.4 per cent.

Offsetting this was a decrease in investment income of 75.6 per cent, due to a one-off investment dividend received in 2017, not repeated in 2018.

Operating expenses stood at Dh858 million, down 4.7 per cent — attributed to ongoing expense management and improved efficiency supported by digital transformation. The bank’s cost to income ratio improved to 31.5 per cent in 2018 compared to 34.1 per cent in 2017.

Dh858m

Operating expenses, an increase of 4.7%

“CBD posted a strong set of results for 2018, lifting our returns whilst delivering on our strategic agenda. We are investing in digital transformation, recruiting and retaining top talent to further enhance business capabilities and position ourselves as a key player in this evolving environment,” said Dr Bernd van Linder, chief executive officer of CBD.

CBD’s total assets increased by 5.2 per cent to Dh74.1 billion as at year-end 2018 compared to Dh70.4 billion at year-end 2017. Loans and advances grew 7.8 per cent to Dh50.9 billion year on year.

Customer deposits stood at Dh53.2 billion as of year-end 2018, representing an increase of 9.8 per cent compared to Dh48.4 billion in 2017. Low cost current and savings accounts (CASA) constituted 38.9 per cent of the total deposit base, while the financing-to-deposits ratio comprised 95.8 per cent.

The bank reported strong improvement in asset quality in 2018 with the non-performing loans (NPL) ratio decreasing significantly to 6.2 per cent from 8.7 per cent at the year-end 2017, with both ratios now calculated under IFRS9. The bank has set aside Dh704 million additional net impairment provisions in 2018 compared to Dh740 million for the prior year.

As at the end of 2018, total expected loss (ECL) allowances amounted to Dh3.11 billion.

At the close of 2018, the bank reported a strong liquidity and capital position with the advance to stable resources ratio 89.4 per cent as at 31 December 2018 compared to 88.6 per cent at year-end 2017.

At the close of 2018, CBD’s Capital Adequacy and Tier 1 capital ratios were at 14.6 per cent and 13.4 per cent, respectively.

Strong fundamentals: 2018 results

■ Total assets increased by 5.2 per cent to Dh74.1 billion from Dh70.4 billion at year-end 2017.
■ Loans and advances grew 7.8 per cent to Dh50.9 billion.
■ Customer deposits increased 9.8 per cent to Dh53.2 billion from Dh48.4 billion in 2017.
■ Cost-to-income ratio rose to 31.5 per cent compared to 34.1 per cent in 2017.
■ Low cost current and savings accounts constituted 38.9 per cent of the total deposit base, while financing-to-deposits ratio comprised 95.8 per cent.