NBAD reports Dh3.7b net profit in 2011

Dubai: The Abu Dhabi National Bank of Abu Dhabi (NBAD) said on Tuesday that it has made Dh3.70 billion net profit in 2011 compared with Dh3.68 billion earned in 2010.

This represents  diluted earnings per share (EPS) of Dh1.19 for 2011 compared with Dh1.16 for 2010.

The bank's total assets were Dh255.7 billion, which represents a 5.6 per cent increase. Loans and advances to customers were Dh159.5 billion, up 2.4 per cent from last year's figure.

Customer deposits at Dh151.8 billion were up 23.3 per cent and by 6.5 per cent compared to figures in September 30, 2011.

Capital resources stood at Dh34.4 billion after dividend payments of Dh240 million on Government of Abu Dhabi (GoAD) Tier-I capital notes in 2011. Capital resources consist of shareholders' funds of Dh22.4 billion, GoAD Tier-I capital notes of Dh4 billion and subordinated notes of Dh8.0 billion.

Capital adequacy ratios (Basle-II) remain well above the minimum 12 per cent required by the UAE Central Bank and (prospective) Basle-3 with a capital adequacy ratio of 20.7 per cent and a Tier-I ratio of 15.6 per cent as at 31 December 2011.

Fourth quarter profit for 2011 was recorded at Dh724 million compared with Dh732 million earned in the fourth quarter of previous year. The return on shareholders' funds for the year is 16.3 per cent.

Operating income for the year reached Dh7.88 billion, up 9.8 per cent compared with Dh7.17 billion for the previous year. Fourth quarter's operating income at Dh1.99 billion is also higher by 9.6 per cent when compared to the fourth quarter of 2010.

Net interest income and net income from Islamic financing contracts for 2011 rose 10.6 per centre to Dh5.80 billion compared to 2010 while non-interest income was higher by 7.7 per cent at Dh2.07 billion.

The net interest margin was 2.48 per cent for 2011, lower than 2.57 per cent for the 2010 due to reduced yields on lending.

Net impairment charges were Dh1.49 billion for the full year and Dh482 million for the fourth quarter of 2011. Before recoveries, impairment charges were Dh1.71 billion compared with Dh1.36 billion in 2010.

Collective provisions of Dh2.32 billion now represent 1.5 per cent of the performing credit risk-weighted assets, well ahead of the Central Bank's 2014 target.

Non-performing loans increased to Dh4.83 billion representing 2.94 per cent of the loan book.

An additional charge of Dh89 million for impaired properties has been taken in the quarter, making the total provisions of Dh159 million for the year for impaired properties. Although the Bank owns many properties and land at low historic cost, no revaluation profit has been taken in this or indeed earlier years providing a significant hidden asset for the group.

Nasser Alsowaidi, chairman of NBAD, said, "The bank continues to deliver a strong and sturdy performance in the face of continued political and economic uncertainties, regionally and globally. The Group's business model and its professional management are its core strengths."

Operating expenses for year ended 31 December 2011 were Dh2.56 billion, higher by 17.3 per cent compared with the financial year ended 31 December 2010.

The cost to income ratio was 32.5 per cent for 2011 comfortably within the medium-term cap of 35 per cent.

Michael Tomalin, Group Chief Executive, commented, "2011 has been one of the most difficult years ever in global banking. The region has also been affected by the Arab Spring, low interest rates and the Euro crisis. Nonetheless, NBAD has produced solid results with operating profits up 6.5 per cent and top-line revenues up 10 per cent. This year we have been particularly cautious regarding provisions, both for our properties which we had purchased for expansion, and our credit portfolio, taking the general provisions to performing credit risk-weighted assets to the 2014 Central Bank target of 1.5 per cent, and adding appropriate specific provisions for non-performing loans. Despite these higher provisions, net earnings have remained steady; a good achievement in a year when many of our global peers have seen sharp falls in their income.

Most importantly, our external ratings have been retained and we remain amongst the 50 safest banks in the world and have become the safest bank in the Middle East. None of this could have been achieved without the skills of our people, the support of our customers and our home base in Abu Dhabi."

The bank extended its reach in UAE to 119 offices adding another 7 units in 2011 to its domestic network complemented by over 500 ATM's. Nine Business Banking centres were opened in 2011 in an ongoing effort to support the vitally important small- and medium-sized enterprises (SMEs) sector.

The bank opened its 2nd branch in Jordan and its 9th branch in Oman, taking its international presence to 51 units across 12 countries at the end of the year. It plans to open its first office in Malaysia and has received the necessary consents to open a representative office in Shanghai in the first quarter of 2012.

Operating profits grew by 6.5 per cent to Dh5.31 billion in 2011 mainly driven by the international businesses and financial markets businesses, which achieved a growth of 26 per cent and 18.7 per cent year-on-year, respectively.

Continued growth in the bank's Islamic banking operations and a 5-fold increase in the Global Wealth businesses also contributed to the increase in Group's operating profits.