Sunday 16, July 2017 by Nabilah Annuar

CBD’s first half 2017 operating profit up 11.5 per cent to AED 864 million

Commercial Bank of Dubai (CBD) has reported its financial results for the first half of 2017.

Performance review

CBD’s net profit for H1-17 of AED 332.5 million was 31.6 per cent lower compared to AED 485.8 million for the same period last year mainly due to prudent provisioning and higher general provisions as a result of loan growth.

Operating income increased by 9.9 per cent to AED 1,313.3 million, mainly due to a 7.1 per cent increase in net interest income to AED 885.2 million (H1-16: AED 826.5 million) and a 16.3 per cent increase in non-interest income to AED 428.1 million (H1-16: AED 368.1 million) with a 18.3 per cent increase in fees and commission income, 81.6 per cent increase in investment income mainly due to one-off dividend income received in June 17 and a 3.7 per cent increase in other income. The above increase in non-interest income was partially off-set by 27.4 per cent drop in foreign exchange income mainly on revaluation of forward positions.

Operating expenses were seven  per cent higher at AED 449.3 million for H1-17 compared to AED 420.1 million for H1-16. Cost to income ratio for the quarter has improved to 34.2 per cent (H1-16: 35.2 per cent).

Commenting on the Bank’s performance, Dr. Bernd van Linder, Chief Executive Officer said, “CBD’s first half results are underpinned by solid loan growth and higher operating profit. Liquidity continues to be robust. Although net profit was impacted by higher impairment provisions as a result our prudent provisioning policy, the Bank is well placed to continue growing in our target segments in the coming quarters.”

Balance sheet

Total assets were higher at AED 67.9 billion as at 30 June 2017, an increase of 10.6 per cent over the AED 61.4 billion as at 30th June 2016, an increase of 5.9 per cent over the previous year end. The increase in assets is attributed primarily to increase in loans and advances and customers’ acceptances.

Loans and advances at AED 46.3 billion registered an increase of 14.1 per cent when compared to AED 40.6 billion as at 30th June 2016 and a 10.4 per cent increase compared to AED 42 billion last year end. Loan book growth was across all business segments. Personal and business banking loans at AED 7.9 billion registered an increase of 8.9 per cent when compared to the AED 7.2 billion as at the end of previous year. Corporate and commercial banking loans were at AED 38.4 billion, a 10.7 per cent increase when compared to AED 34.7 billion as at 31 December 2016.

Customers’ deposits of AED 46.9 billion as at 30 June 2017, increased by 13.4 per cent compared to AED 41.3 billion as at 30 June 2016 and 7.1 per cent compared to AED 43.8 billion at the previous year end. Current and Savings accounts (CASA) constitute 42.3 per cent of the total deposit base, while financing to deposits ratio stood at 98.8 per cent.

Resilient asset quality

Non-performing loans ratio continues its downward trend improving to 6.2 per cent (31 December 2016: 6.9 per cent) with overall loan loss coverage ratio at 91.5 per cent (31 December 2016: 101.6 per cent).

In line with the Bank’s prudent provisioning policy, additional net impairment provisions of AED 531.5 million were set aside during the first half compared to AED 288.7 million for the same period previous year. This includes AED 55 million for general provisions, as a result of balance sheet growth. General provisions represent 1.5 per cent of the Bank’s credit risk weighted assets as at the end of H1-17.

Liquidity and capital adequacy continue to remain strong

The bank’s liquidity position continued to be comfortable with advance to stable resources ratio of 86.4 per cent as at 30 June 2017 (31 December 2016: 83.7 per cent), while the UAE Central Bank has set 100 per cent as the maximum limit. Liquidity Coverage Ratio calculated as per Basel III guidelines was at 133.7 per cent, compared to a minimum ratio of 80 per cent prescribed by UAE Central Bank (31st December 2016: 133.9 per cent). The Net Stable Funding Ratio was 102.5 per cent (31st December 2016: 109 per cent).

CBD’s capital adequacy and Tier 1 capital ratios were at 14.9 per cent and 13.8 per cent, respectively, and were significantly above the regulatory thresholds of 10.5 per cent and 8.5 per cent mandated by the UAE Central Bank.

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