National Bank of Dubai stock split approved

Shareholders of the National Bank of Dubai (NBD) yesterday approved a ten-for-one stock split. The shareholders also approved the board's proposal to maintain the cash dividend at 40 per cent. The bank saw net profit rising marginally from Dh404.15 million to Dh408.99 million in 2000.

Although interest income rose from Dh1.3 billion to Dh1.63 billion, it was not reflected in the net interest income due to the high interest expense of Dh1.11 billion the bank incurred compared to Dhs782 million in 1999. The bank remains highly liquid as demonstrated by the proportion of liquid assets to deposits, which stands at 86.86 per cent. While loans and advances grew marginally from Dh6.86 billion to Dh6.98 billion, growth in customer deposits was relatively high rising from Dh18.56 billion to Dh21.3 billion.

Total assets posted reasonable growth moving up from Dh24.9 billion to Dh28.14 billion, a 13 per cent growth. On the asset side, the bank had to increase the cash and balances with the UAE Central Bank substantially from about Dh700 million to Dh1.67 billion following the new stipulation on cash reserve ratio.

"This certainly affected the profitability of the bank during 2000," bank officials said. The bank, capitalised at Dh864.5 million, has one of the highest capital adequacy ratios in the region at 42.57 per cent, against the minimum required ratio of 10 per cent.

Referring to a possible merger, the officials made it clear that the shareholders right now didn't see any immediate requirement. "However, one cannot rule out the chance of a merger in the long term given the new scenario emanating from the WTO," they added.