A branch of National Bank of Fujairah in Dubai
A branch of National Bank of Fujairah in Dubai. The bank's operating income at Dh1.7 billion experienced a growth of 8.5 per cent year on year in 2019. Image Credit: Gulf News Archives

Dubai: National Bank of Fujairah (NBF) on Sunday reported a net profit of Dh552.2 million compared to Dh615.3 million in 2018, posting a decline of 10.3 per cent after absorbing elevated level of provisions.

Bank’s board has recommended distribution of profits of 13.5 per cent in the form of cash dividends of 10 per cent and bonus shares of 3.5 per cent.

NBF’s total comprehensive income for the year was Dh611.5 million, up 4.5 per cent compared to Dh585.4 million in 2018. The bank achieved a strong operating profit of Dh1.15 billion which increased by 8.9 per cent compared to Dh1.05 billion in 2018.

Operating income at Dh1.7 billion experienced a growth of 8.5 per cent. This was driven by a high level of resilience in the bank’s core business with good volume growth, enhanced balance sheet management and effective pricing strategies.

“Our segmented focus and comprehensive set of products and service channels coupled with our customer centric business model helped us achieve consistent business and revenue growth in a subdued operating environment,” said Easa Saleh Al Gurg, Deputy Chairman of NBF.

Net interest income and net income from Islamic financing and investment activities grew by 6 per cent and net fees, commission and other income by 10.9 per cent compared to 2018.

Income from investments and Islamic instruments marked a significant bounce back with a fair value gain of Dh10.8 million compared to a fair value loss of Dh5 million in 2018. Foreign exchange and derivatives income saw a growth of 10.1 per cent to reach a record level of Dh151.2 million compared to Dh137.3 million in 2018.

Balance sheet growth

Total assets rose by 7.6 per cent to reach Dh42.8 billion from Dh39.8 billion at 2018 year-end. Loans and advances and Islamic financing receivables rose 3.4 per cent from Dh26.2 billion at 2018 year end to Dh27.1 billion. Investments and Islamic instruments were up by 24.1 per cent from Dh2.7 billion at 2018 year end to Dh3.4 billion.

Customer deposits and Islamic customer deposits grew 4.8 per cent to Dh31.9 billion compared to Dh30.5 billion at 2018 year end.

Operating expenses increased by 7.9 per cent, reflecting NBF’s investments in digital initiatives and the bank’s infrastructure to improve customer service and competitiveness in line with changing market demands. Nevertheless, the cost-to-income ratio improved to 33 per cent compared to 33.2 per cent in 2018.

NBF made net impairment provisions of Dh593 million in 2019 compared to AED 436.8 million in 2018. Total provision coverage ratio (including impairment reserves) improved to 107.3 per cent from 102 per cent as at 31 December 2018. The NPL ratio stood at 5.44 per cent compared to 5.13 per cent as at 31 December 2018.

At the close of 2019, the bank’s capital adequacy significantly improved to 17.8 per cent and Tier 1 ratio of 16.6 per cent and CET 1 ratio of 12.9 per cent at the close of 2019.