NBF improved operating profit underpinned by robust balance sheet management
National Bank of Fujairah PJSC (NBF) is pleased to announce its results for the year ended 31 December 2017 in accordance with the approval received from the Central Bank of the United Arab Emirates (CBUAE).
HE Sir Easa Saleh Al Gurg, KCVO, CBE Deputy Chairman said that NBF’s solid performance was achieved in the face of the ongoing challenges in the business environment, underlining its focus on true value creation, exceptional customer service and the development of an agile business model. “Prudent risk management and corporate governance practices, strong capital adequacy, healthy liquidity and success in leveraging technology continue to enhance the Group’s ability to navigate through times of uncertainty and allow us to emerge stronger for future growth.”
Highlights from 2017 include an operating profit of AED 913.6 million, a 5.5 per cent growth up from AED 866 million in 2016. This reflects a high level of resilience in the bank’s core business and enhanced balance sheet management in a rising interest rate environment.
Operating income at AED 1.4 billion saw a growth of 4.5 per cent compared to 2016. Income from investments and Islamic instruments increased to AED 19.3 million compared to AED 11.1 million in 2016, a growth of 73.6 per cent, while net interest income and net income from Islamic financing and investment activities for the year grew by 8.2 per cent to AED 917.6 million compared to 2016.
Operating expenses increased by 2.6 per cent, reflecting NBF’s disciplined cost management, prudent investments in our businesses, systems and infrastructure, including a set of digital initiatives to enhance our future offerings and customer service. Cost-to-income ratio stood at 33.7 per cent compared to 34.4 per cent in 2016.
NBF’s prudent loan loss provisioning policy resulted in net impairment losses of AED 441.7 million compared to AED 405.5 million in 2016. The NPL ratio was 5.53 per cent compared to 4.95 per cent as at 31 December 2016. Total provision coverage ratio stood at 89.5 per cent compared to 101.3 per cent as at 31 December 2016.
The bank’s strong operating profit enabled it to absorb elevated level of impairment losses and record a growth in net profit of 2.5 per cent. NBF reported net profit of AED 471.9 million compared to AED 460.4 million in 2016.
Loans and advances and Islamic financing receivables rose 5.5 per cent from AED 22.8 billion at 2016 year end to AED 24.1 billion.
Customer deposits and Islamic customer deposits increased by 7.4 per cent from AED 25.9 billion at 2016 year end to AED 27.9 billion.
Investments and Islamic instruments were up 7.3 per cent representing 5.2 per cent of total assets, while shareholders’ equity of AED 4.9 billion showed an increase of 6.8 per cent from the 2016 year end.
Strong capital adequacy and lending to stable resources ratios were maintained at 17.5 per cent (Tier 1 ratio of 15.1 per cent) and 86.9 per cent respectively, well ahead of Central Bank’s minimum requirements. The bank continues to maintain a high eligible liquid assets ratio at 24.1 per cent and its Basel III net stable funding ratio stood at 107.1 per cent, while its liquidity coverage ratio was 270 per cent.
Return on average assets was 1.3 per cent (31 December 2016: 1.4 per cent) and return on average equity was 10.0 per cent (31 December 2016: 10.4 per cent).
Finally, taking into account the 2017 performance, a distribution of profits of 15 per cent (2016: 15 per cent) has been recommended in the form of cash dividends of 7.5 per cent (2016: 7.5 per cent) and bonus shares of 7.5 per cent (2016: 7.5 per cent) of the paid-up capital.
HH Sheikh Saleh Bin Mohamed Bin Hamad Al Sharqi, Chairman said, added that NBF has delivered strong performance through its renewed focus on being the financial partner for business, and meeting its customers’ professional and personal needs. NBF’s customer centric business philosophy, successful track record of execution and adaptability to change enables it to achieve exceptional client satisfaction and generate exceptional shareholder value. The Board is encouraged by the continued development and success of the NBF franchise.
“We were honoured with our highest number of prestigious awards and endorsements through-out 2017, further underscoring NBF’s long outstanding culture of service excellence and client partnership. On behalf of the Board, we would like to take this opportunity to thank both our clients and our shareholders for their continued support and our employees for their dedication and commitment over the years,” said Al Sharqi.