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43814
Tue, 02/03/2009 - 12:13
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https://oananews.org//node/43814
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NBAD's record result bucks global trend
Abu Dhabi, Feb 3, 2009 (WAM) - The Board of Directors of National Bank of Abu Dhabi (NBAD) reviewed the full year results for 2008 and reported net profits of AED 3019 million, a 20.5% increase on the Dh2505 million achieved for 2007.
Earnings per share were Dh1.5 per share compared with Dh1.3 in 2007. These profits are struck after voluntary collective provisions of Dh603 million, specific provisions of Dh214 million and write offs of Dh18 million, mitigated by recoveries and write backs of Dh118 million.
The Board decided to take additional collective provisions across its whole performing portfolio as a precautionary measure in tough markets. Actual underlying performance of the loan book remains good. Non-performing loans at the end of 2007 were Dh859 million and, during the whole of 2008, despite a Dh32 billion increase in the size of the loan book, non performing loans rose by Dh213 million to Dh1072 million.
Collective provision of Dh848 million represents 0.76% of total performing loans and 1.15% of performing loans excluding those related to the Government or public sector entities in Abu Dhabi. The respective figures for 2007 were 0.31% and 0.48% illustrating the substantial increase the Bank has chosen to make in provisions this year.
Top line fourth quarter operating profits were Dh904 million, up16% on the Dh782 million earned in the fourth quarter of 2007. Net profits in the fourth quarter were Dh492 million, lower than the Dh744 million net profits in the fourth quarter of 2007, after collective impairment provisions of Dh289 million compared with Dh16 million in the fourth quarter of 2007.
The annualised return on equity for the year is 24% and in line with the Bank's medium term strategic objectives to achieve an average return of 25% over the economic cycle.
No property revaluations have been taken during the year. We have not elected to reclassify investments in our trading book as allowed in the latest amendment to IAS39 and IFRS7 so both 2007 and 2008 results are comparable, and we have not reversed back to profit any market related revaluation losses, a bank press release said today.
Total assets at the end of 2008 reached Dh165 billion, 18% higher than at the end of 2007. Reflecting the tightness in the credit market in the fourth quarter of 2008, loans did not grow at all during this period. Deposits rose from Dh82 billion at the end of 2007 to Dh103 billion at the end of 2008, a growth of 27%. Customer loans grew from Dh80 billion to Dh112 billion for the same period, a growth of 40%.
Top line operating profits, before provisions and taxes, increased 46% for the year to Dh3.8 billion. Income increased 45%, to Dh5.3 billion, and costs grew 42% to Dh1.49 billion. The growth of costs was in line with budget and reflects the Bank's continuing investment in new markets, products, people, processes, systems and brand. The cost income ratio of 28% at the end of 2008 compares favourably with competing banks around the world and is slightly better than the 29% cost income ratio achieved in 2007. The provision for taxes on overseas earnings rose Dh8 million to Dh72 million in 2008.
All the main businesses of the Bank performed well in 2008. Financial Markets division earnings were up an exceptional 161% on 2007 at Dh745 million, representing 20% of top line operating profits. International Banking earnings were up 44% at Dh694 million accounting for 18% of operating profits. Domestic Banking earnings were up 48% at Dh2.2 billion contributing 57% of top line operating profits. Together these three businesses accounted for 94% of top line earnings.
Global Wealth had a difficult year given adverse equity markets with operating profits Dh52 million, compared with Dh183 million in 2007. Islamic Banking in its first full year of activity earned Dh24 million, compared with the start up loss of Dh10 million in 2007. Head Office, which runs as a business, earned Dh143 million.
During the year the Bank restructured its business to provide greater customer focus. A new Corporate and Investment Banking division was created absorbing the old investment bank, the Corporate Banking Group formerly in Domestic Banking and Wholesale Banking in International Banking. This new division earned Dh1360 million in 2008 reallocating some of the earnings of Domestic and International Banking. Financial Markets, Global Wealth and Islamic Banking are unaffected by these changes.
NBAD disclosed in 2007 that it had no direct exposure to CDOs, SIVs or the US subprime market, although, of course, it does have exposure to financial institutions that do. NBAD has no direct exposure either to Lehmans or Madoff although there is US$8.8M of settlement exposure caught in the Lehman's administration. No significant new specific credit provisions were required this year as a direct result of the international credit crisis.
Commenting on the results, the newly appointed Chairman, HE Nasser Ahmed Khalifa Al Suwaidi said, "These are excellent financials. The Bank is well placed to continue to contribute to the ongoing growth of Abu Dhabi, and the UAE more widely." Chief Executive, Michael H Tomalin, said "The Bank continues to perform strongly at the operational level reflecting the sound fundamentals of the Abu Dhabi economy and the UAE. By international comparison NBAD's financial results for 2008 are strong and our ratings reflect that. However, NBAD is an active international bank and we are not immune from world events. The liquidity tightness in the UAE has yet to have its full effect on the real economy.
"We therefore expect a difficult 2009 although the exceptional collective provisions we have taken this year should put us in the best possible position to withstand it." The Bank's capital position remains strong. Capital and reserves, including the convertible subordinated debt, at the end of 2008 were Dh17.4 billion, 28% up on the Dh13.7 billion at the end of 2007. The Bank's Basle II capital ratio at the end of 2008 was 15.4% compared to 16.5% at the end of 2007.
NBAD's long term ratings are amongst the strongest combined ratings of any financial institution in the MENA region with Moodys Aa3, Standard '&' Poors A+, and Fitch AA-.
The Board of Directors will recommend to shareholders at the AGM scheduled to be held on the 11 March 2009 a 20% cash dividend and 40% stock dividend for the financial year 2008.
For a second year the directors agreed to pay 1% of net profits to good causes in Abu Dhabi as part of its Corporate Social Responsibility programme, in addition to other social contributions, to make total contributions Dh47 million.
These results are subject to approval from the Central Bank of the UAE and shareholders' Annual General Meeting.
Earnings per share were Dh1.5 per share compared with Dh1.3 in 2007. These profits are struck after voluntary collective provisions of Dh603 million, specific provisions of Dh214 million and write offs of Dh18 million, mitigated by recoveries and write backs of Dh118 million.
The Board decided to take additional collective provisions across its whole performing portfolio as a precautionary measure in tough markets. Actual underlying performance of the loan book remains good. Non-performing loans at the end of 2007 were Dh859 million and, during the whole of 2008, despite a Dh32 billion increase in the size of the loan book, non performing loans rose by Dh213 million to Dh1072 million.
Collective provision of Dh848 million represents 0.76% of total performing loans and 1.15% of performing loans excluding those related to the Government or public sector entities in Abu Dhabi. The respective figures for 2007 were 0.31% and 0.48% illustrating the substantial increase the Bank has chosen to make in provisions this year.
Top line fourth quarter operating profits were Dh904 million, up16% on the Dh782 million earned in the fourth quarter of 2007. Net profits in the fourth quarter were Dh492 million, lower than the Dh744 million net profits in the fourth quarter of 2007, after collective impairment provisions of Dh289 million compared with Dh16 million in the fourth quarter of 2007.
The annualised return on equity for the year is 24% and in line with the Bank's medium term strategic objectives to achieve an average return of 25% over the economic cycle.
No property revaluations have been taken during the year. We have not elected to reclassify investments in our trading book as allowed in the latest amendment to IAS39 and IFRS7 so both 2007 and 2008 results are comparable, and we have not reversed back to profit any market related revaluation losses, a bank press release said today.
Total assets at the end of 2008 reached Dh165 billion, 18% higher than at the end of 2007. Reflecting the tightness in the credit market in the fourth quarter of 2008, loans did not grow at all during this period. Deposits rose from Dh82 billion at the end of 2007 to Dh103 billion at the end of 2008, a growth of 27%. Customer loans grew from Dh80 billion to Dh112 billion for the same period, a growth of 40%.
Top line operating profits, before provisions and taxes, increased 46% for the year to Dh3.8 billion. Income increased 45%, to Dh5.3 billion, and costs grew 42% to Dh1.49 billion. The growth of costs was in line with budget and reflects the Bank's continuing investment in new markets, products, people, processes, systems and brand. The cost income ratio of 28% at the end of 2008 compares favourably with competing banks around the world and is slightly better than the 29% cost income ratio achieved in 2007. The provision for taxes on overseas earnings rose Dh8 million to Dh72 million in 2008.
All the main businesses of the Bank performed well in 2008. Financial Markets division earnings were up an exceptional 161% on 2007 at Dh745 million, representing 20% of top line operating profits. International Banking earnings were up 44% at Dh694 million accounting for 18% of operating profits. Domestic Banking earnings were up 48% at Dh2.2 billion contributing 57% of top line operating profits. Together these three businesses accounted for 94% of top line earnings.
Global Wealth had a difficult year given adverse equity markets with operating profits Dh52 million, compared with Dh183 million in 2007. Islamic Banking in its first full year of activity earned Dh24 million, compared with the start up loss of Dh10 million in 2007. Head Office, which runs as a business, earned Dh143 million.
During the year the Bank restructured its business to provide greater customer focus. A new Corporate and Investment Banking division was created absorbing the old investment bank, the Corporate Banking Group formerly in Domestic Banking and Wholesale Banking in International Banking. This new division earned Dh1360 million in 2008 reallocating some of the earnings of Domestic and International Banking. Financial Markets, Global Wealth and Islamic Banking are unaffected by these changes.
NBAD disclosed in 2007 that it had no direct exposure to CDOs, SIVs or the US subprime market, although, of course, it does have exposure to financial institutions that do. NBAD has no direct exposure either to Lehmans or Madoff although there is US$8.8M of settlement exposure caught in the Lehman's administration. No significant new specific credit provisions were required this year as a direct result of the international credit crisis.
Commenting on the results, the newly appointed Chairman, HE Nasser Ahmed Khalifa Al Suwaidi said, "These are excellent financials. The Bank is well placed to continue to contribute to the ongoing growth of Abu Dhabi, and the UAE more widely." Chief Executive, Michael H Tomalin, said "The Bank continues to perform strongly at the operational level reflecting the sound fundamentals of the Abu Dhabi economy and the UAE. By international comparison NBAD's financial results for 2008 are strong and our ratings reflect that. However, NBAD is an active international bank and we are not immune from world events. The liquidity tightness in the UAE has yet to have its full effect on the real economy.
"We therefore expect a difficult 2009 although the exceptional collective provisions we have taken this year should put us in the best possible position to withstand it." The Bank's capital position remains strong. Capital and reserves, including the convertible subordinated debt, at the end of 2008 were Dh17.4 billion, 28% up on the Dh13.7 billion at the end of 2007. The Bank's Basle II capital ratio at the end of 2008 was 15.4% compared to 16.5% at the end of 2007.
NBAD's long term ratings are amongst the strongest combined ratings of any financial institution in the MENA region with Moodys Aa3, Standard '&' Poors A+, and Fitch AA-.
The Board of Directors will recommend to shareholders at the AGM scheduled to be held on the 11 March 2009 a 20% cash dividend and 40% stock dividend for the financial year 2008.
For a second year the directors agreed to pay 1% of net profits to good causes in Abu Dhabi as part of its Corporate Social Responsibility programme, in addition to other social contributions, to make total contributions Dh47 million.
These results are subject to approval from the Central Bank of the UAE and shareholders' Annual General Meeting.
