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CBD net profits decline 5.2% in first 9 months

Loans and advances increase 13.1% to Dh47.5 billion

Image Credit: Ahmed Ramzan/Gulf News Archives
A CBD branch in Dubai. The bank’s cost to income ratio improved to 33.7 per cent compared to 35.8 per cent at the close of the third quarter 2016.
Gulf News

Dubai: Commercial Bank of Dubai (CBD) reported a nine-month net profit of Dh665 million, 5.2 per cent lower compared to Dh701 million for the same period last year.

The bank attributed the decline in net profits to prudent provisioning and higher general provisions as a result of loan growth.

Operating income increased by 10.9 per cent to Dh1.98 billion, mainly owing to an 8.4 per cent increase in net interest income to Dh1.35 billion compared to Dh1.24 billion reported in the same period last year.

Non-interest income increased by 16.4 per cent to Dh634 with a17.4 per cent increase in fees and commission income, 46.8 per cent increase in investment income mainly due to one-off dividend income received in June 2017 and a 13.7 per cent increase in other income. The increase in non-interest income was partially off-set by a 5.1 per cent drop in foreign exchange income, mainly on revaluation of forward positions.

Operating expenses were 4.4 per cent higher at Dh669.9 million for the first nine months of the year compared to Dh641.9 million for same period last year. Cost to income ratio improved to 33.7 per cent compared to 35.8 per cent at the close of the third quarter 2016.

CBD’s total assets were higher at Dh68.9 billion as at September 30, 2017, an increase of 10.9 per cent over the Dh62.2 billion as at September 30, 2016, and an increase of 7.6 per cent over the previous year end. The increase in assets is attributed primarily to an increase in loans and advances and customers’ acceptances.

Loans and advances at Dh47.5 billion registered an increase of 14.9 per cent at the close of the third quarter of 2017 compared to Dh41.3 billion in the same period last year and a 13.1 per cent increase compared to year-end 2016.

“CBD has delivered solid top-line growth operating returns. Loan growth was particularly strong in the Bank’s core segments as net loans increased by 13 per cent in 2017. Operating profits rose by almost 15 per cent on the back of 11 per cent increase in revenues. Our efforts during the past twelve months to streamline processes and the distribution network have also started to yield results, and will continue to create additional value in the future,” said Dr. Bernd van Linder, Chief Executive Officer of CBD.

The bank reported strong growth in customer deposits of 13.1 per cent year on year to Dh47.5 billion. Current and Savings accounts (CASA) constitute 41.5 per cent of the total deposit base, while financing to deposits ratio stood at 99.9 per cent.

Non-performing loans ratio continued to improve during the first three quarters of the year to 6.4 per cent at the close of the third quarter compared to 6.9 per cent at year end 2016.

The bank has set aside additional net impairment provisions of Dh652.7 million during the first nine months of 2017 compared to Dh449.3 million for the same period previous year. This includes an additional Dh64 million for general provisions, as a result of balance sheet growth.

The bank’s liquidity position continued to be comfortable with advance to stable resources ratio of 87.5 per cent at the close of the third quarter and liquidity coverage ratio calculated as per Basel III guidelines was at 137.2 per cent. Capital adequacy and Tier 1 capital ratios were at 15.3 per cent and 14.2 per cent, respectively.

“With a strong balance sheet as well as a robust liquidity and adequate capital CBD is well-placed to meet the evolving regulatory landscape,” said Dr.van Linder.

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