NBF’s nine-month net profit up 36.4% to hit AED90.4mn

Fujairah / Emirates Business

The National Bank of Fujairah (NBF) announced its results for the nine month period ended September 30.
The bank achieved a net profit of AED90.4 million for the nine month period ended September 30, an increase of 36.4% over the corresponding period of 2020 driven by improving underlying business momentum and good progress across the bank’s digitalisation program. The bank said net profit was substantially higher by 1,063.3% for the three-month period ended September 30 compared to the corresponding period of 2020
Supported by higher fee income and investment income, NBF posted an operating profit of AED243.4 million in the third quarter of 2021, a rise of 30.9% quarter-on-quarter, and an increase of 5.4% for the nine month period compared to 2020 reaching AED745.4 million. This reflects a high level of resilience in the bank’s core business and enhanced balance sheet management in the
prevailing low interest rate
environment.
The bank reports operating income growth at 17.5% and 2.1% was recorded for the three month and nine month periods ended September 30 respectively over the corresponding periods of 2020. It stood at AED1.08 billion for the nine month period ended
September 30 compared to AED1.06 billion in the corresponding period of 2020,
recuperating from the mass disruptions caused by the Covid-19 pandemic globally.
The bank’s net interest income and net income from Islamic financing and investment activities grew 14.3% compared to same period in 2020. It stood at AED709.3 millioncompared to AED722.1 million in the corresponding period of 2020.
Net fees, commission and other income rises 13.2% to AED251.8 million compared to AED222.3 million in the corresponding period of 2020.
It was up 30.3% for the three month period ended September 30 compared to the
corresponding period of 2020.
Foreign exchange and
derivatives income of the bank
during the period reached AED82.0 million. Income from investments and Islamic instruments marked a substantial improvement to AED41.6 million compared to the corresponding period of 2020. Unrealised gain on fair value through other comprehensive income (FVOCI) investments stood at AED54.0 million.
NBF’s operating expenses were reduced by 4.4% to AED339.3 million compared to AED354.8 million in corresponding period of 2020, demonstrating the measures adopted in line with the changing market conditions and its focus on exceptional customer service through digital adoption and innovation. Cost-to-income ratio was reduced to 31.3% compared to 33.4% in the corresponding period of 2020 reflecting the compound effect of the savings in cost base and growth in operating income.
NBF maintained its policy
of prudent and transparent recognition of problem accounts. The bank secured net impairment provisions of AED654.9 million for the nine month period ended September 30 compared to AED641.0 million in the corresponding period of 2020.
During the period, the bank’s impairment reserve reduced to AED258.7 million compared to AED 283.5 million as at December 31, 2020. Total provision coverage ratio (including impairment reserves) stood at 83.1% compared to 91.8% as at December 31, 2020. The NPL ratio stood at 10.5% compared to 10.1% as at December 31, 2020. Excluding a few exceptional group exposures, the NPL ratio would reduce to 6.2% (December 31, 2020: 7.3%).
The capital adequacy ratio (CAR) is being kept at a recent high for NBF to support the bank’s ability to ride out any challenges arising out of the evolving operating landscape. CAR stood at 19.3% (Tier 1 ratio of 18.2% and CET 1 ratio of 13.9%) compared to 19.2% (Tier 1 ratio of 18.1% and CET 1 ratio of 14.0%) at 2020 year-end.
Loans and advances and Islamic financing receivables at NBF rise by 2.4% to reach AED25.43 billion compared to AED24.84 billion at 2020 year-end; and up 0.2% compared to AED25.37 billion as at 30 September 2020.
Investments and Islamic instruments stood at the September 30, 2020 level of AED4.6 billion compared to AED5.2 billion at 2020 year-end evidencing the deployment of a portion of excess liquidity towards the high quality investment book to protect shareholder value.
Customer deposits and Islamic customer deposits at NBF stood at AED29.5 billion compared to AED 29.8billion at 2020 year-end and AED31.2 billion as at September 30, 2020. Casa deposits improved to a record high at 45.5% of total customer deposits compared to 38.0% as at December 31, 2020 and 32.2% as at September 30, 2020. Current and Saving Accounts (Casa) deposits increased by AED2.1 billion to reach AED13.4 billion compared to AED 11.3 billion as at December 31, 2020 cushioning the impact from the lower interest rates.
Total assets of the bank rise by 2.2% to reach AED 40.7billion compared to AED39.9 billion at 2020 year-end and AED41.8 billion as at September 30, 2020.
Shareholders’ equity at NBF stood at the 2020 year-end level of AED5.7 billion compared to AED6.2 billion as at September 30, 2020.
Ample liquidity was maintained with lending to stable resources ratios at 79.7% (2020: 82.1%) and eligible liquid assets ratio (ELAR) at 20.3% (2020: 20.8%), well ahead of all CBUAE minimum requirements.
The bank’s return on average assets was 0.3%, up from 0.2% for the corresponding period in 2020 and return on average equity was 2.1%, up from 1.4% for the corresponding period in 2020.
In line with the requirements of UAE central bank pertinent to minimum capital for banks, the bank increased its paid-up capital by way of issuing 85,238,116 bonus shares from retained earnings to reach AED2 billion.
Commenting on the results, Dr Raja Al Gurg, Deputy Chairperson said, “We are pleased with these encouraging set of results that demonstrate the return of growth across our operating and net performance and marked development in the implementation of our business and operational strategy. These results are after absorbing the substantial negative impact from a few exceptional exposures and Covid-19 pandemic relatively early to achieve augmented recovery in the economic cycle.
Although the pandemic has posed many challenges and caused considerable volatility, the prospects for an economic recovery are firmer now and the UAE’s economy has proven to be resilient in the face of adversity. Likewise, NBF’s resilient performance underpins its capability to steer through the changing operating landscape with a staunch business focus. Further, the Group retains strong capital adequacy and is well placed to support business growth and pace up shareholder value.
Whilst we stand at the cusp of great economic and digital change, we are working towards further building on best practices and encourage the development of next generation digital initiatives and innovative solutions to support our focus on enhancing the clients’ experience and strengthening our governance and control.
Looking ahead, the group will continue to tap new business opportunities keeping in view UAE’s economic recovery has begun to gain momentum, underpinned by its early and strong response to the Covid-19 pandemic, continued supportive macroeconomic policies, successful vaccination drive, significant non-oil activity, increased tourism, revival of production and trade world-wide and activity related to Expo 2020.”