NBF 9-month profit rises 10.7% to AED511.6mn

Fujairah / WAM

The National Bank of Fujairah (NBF), announced a net profit of AED511.6 million for the period ended September 30, an increase of 10.7 percent over the corresponding period of 2018.
According to a press release issued by NBF on Wednesday, the Bank also achieved strong operating profit of AED862.3 million which increased by 7.2 percent compared to AED804.4 million in the corresponding period of 2018.
Operating profit of AED295.3 million was posted in the third quarter of 2019, a rise of 4.7 percent over the previous quarter, and an increase of 3.8 percent for the same three months in 2018.
Operating income for the nine month period at AED1.28 billion saw a growth of 8.4 percent compared to the corresponding period of 2018. Net interest income and net income from Islamic financing and investment activities grew by 5.8 percent and net fees, commission and other income by 14.7 percent compared to the corresponding period of 2018.
Income from investments and Islamic instruments marked a significant bounce back; fair value gain on fair value through profit or loss (FVTPL), and fair value through other comprehensive income (FVOCI), investment portfolio also improved by AED 60.7 million during the nine month period ended September 30.
Foreign exchange and derivatives income experienced a growth of 9.1 percent reaching AED112.5 million for the nine month period compared to AED103.1 million in 2018.
The bank added that operating expenses increased by 11.0 percent for the nine month period ended September 30 compared to the corresponding period of 2018, reflecting NBF’s investments in multiple digital initiatives and infrastructure to improve customer service and competitiveness in line with changing market demands. Cost-to-income ratio stood at 32.7 percent compared to 31.9 percent in the corresponding period of 2018 and 33.2 percent for the year ended December 31, 2018.
NBF secured net impairment provisions of AED 350.7 million for the nine month period compared to AED 342.3 million in 2018, as the bank has used the improved operating performance to increase its overall coverage levels in view of the continued slow-down and credit stress in the market. Total provision coverage ratio (including impairment reserves) improved to 107.8 percent from 102 percent as at December 31, 2018. The NPL ratio remained stable at 5.1 percent at the December 2018 position.
Loans and advances and Islamic financing receivables rose 5.2 percent from AED26.2 billion at 2018 year end to AED 27.6 billion, and up by 3.6 percent from September 30, 2018. Customer deposits and Islamic customer deposits depicted a growth of 2.4 percent at AED31.2 billion compared to AED30.5 billion at 2018 year end, up by 6.8 percent from September 30, 2018.

Assets reached AED 42.5 billion; a rise of 6.9 percent from AED39.8 billion at 2018 year-end, up by 9.2 percent from 30th September 2018. Shareholders’ equity rose 7.9 percent from AED 5.1 billion at 2018 year-end to AED5.5 billion, up by 10.7 percent from 30th September 2018.

Strong capital adequacy and lending to stable resources ratios were maintained at 16.3 percent (Tier 1 ratio of 15.2percent and CET 1 ratio of 13.8percent) and 89.3 percent respectively, well ahead of CBUAE minimum requirements. Further, eligible liquid assets ratio, ELAR, and advances to deposits ratio remained strong at 20.1percent and 88.3 percent respectively.

Return on average assets was 1.66 percent, up from 1.63 percent for the corresponding period in 2018. Return on average equity was 12.81 percent, up from 12.47 percent for the corresponding period in 2018.

In October 2019, NBF successfully completed its inaugural public issuance of Additional Tier 1, AT1, capital securities of US$350 million (AED1.3 billion) which was very well received by the investors and resulted in an order book in excess of US$1.5 billion (AED5.5 billion). The purpose of the AT1 issuance is to strengthen and optimise NBF’s capital base and to diversify the bank’s capital and investor base. NBF has also completed the early buy-back of existing privately placed AT1 capital notes of AED500 million in October 2019. Following these capital changes, NBF’s capital adequacy ratio will be in the range of 18 – 19 percent and Tier 1 ratio in the range of 17 – 18 percent.

Commenting on the announcement, Easa Saleh Al Gurg, KCVO, CBE, Deputy Chairman of NBF, said, “We are extremely pleased with this strong set of results, particularly in an economic environment where uncertainties are weighing on market sentiments. With slow global growth, volatile geopolitical conditions and a declining interest rate environment, NBF’s resilient performance reinforces its ability to navigate through the changing operating environment with a resolute business focus coupled with healthy liquidity and strong capital adequacy.”