NBFâ€™s profit jumps 81.4 per cent in the first quarter of 2017
Underpinned by strong liquidity and improvement in loan impairment provisions, National Bank of Fujairah’s (NBF) net profit grew 81.4 per cent to AED 126.1 million from AED 69.5 million in Q4 2016.
National Bank of Fujairah has announced its results for the three month period ended 31 March 2017. In a press statement, the bank revealed that it had recorded a net profit of AED 126.1 million which is significantly higher than the AED 69.5 million reported in Q4 2016; a rise of 81.4 per cent which reflects improvement in the impairment provisions during the current quarter. Compared to the corresponding period of 2016, net profit was lower by 16.2 per cent after absorbing the ongoing elevated provisions.
Commenting on these positive results, HE Sir Easa Saleh Al Gurg, KCVO, CBE Deputy Chairman said, “2017 proved as a good start for NBF, with the bank being honoured with a number of prestigious awards and endorsements, underscoring NBF’s long-standing culture of service excellence and client partnership. We are particularly delighted that the bank has been awarded the Best Customer Service—Corporate and Investment Banking, Best Corporate Advisory Service—NBF Capital, Best Treasury Management, Best SME internet Banking Service and Best SME Trade Finance Offering awards at the recent Banker Middle East UAE Awards.”
“NBF’s resilient financial performance in a difficult environment demonstrates its strong focus on being a reliable and consistent player and re-affirmation of our credit rating by Moody’s further underscores our commitment to long-term sustainability. We are positive that the bank will continue to perform well in 2017 and will improve its results progressively as the impairment charges reduce to a normalised level through the course of the year,” he added.
NBF’s operating income was AED 324.6 million compared to AED 336.3 million in the corresponding period of 2016. Marginally lower operating income attributes to one-off exceptional income recorded in Q1 2016 and a significantly higher level of high quality liquid assets than the industry in general, which impacts interest margins. Foreign exchange and derivatives income recorded a 13.5 per cent increase compared to the corresponding period of 2016.
Operating expenses decreased by 0.5 per cent, reflecting NBF’s disciplined cost management. This improvement was achieved whilst we continued to make prudent investments in our businesses, systems and infrastructure, including a set of digital initiatives to enhance our offerings and customer service. Cost-to-income ratio stood at 34.7 per cent compared to 33.7 per cent in the corresponding period of 2016.
Loans and advances as well as Islamic financing receivables of AED 23.2 billion were up by 1.6 per cent from AED 22.8 billion at 2016 year end, and up by 11.2 per cent from 31 March 2016. Customer deposits and Islamic customer deposits of AED 26.5 billion were up by 2.2 per cent from AED 25.9 billion at 2016 year end, and up by 14.5 per cent from 31 March 2016.
Shareholders’ equity of AED 4.6 billion remained at the 2016 year end level, while up by 6.3 per cent from 31 March 2016. Strong capital adequacy and liquidity levels were maintained, well ahead of Central Bank minimum requirements. Capital adequacy ratio was 17.5 per cent, lending to stable resources ratio stood at 84.8 per cent and eligible liquid assets ratio (ELAR) remains as one of the highest at the industry level at 24.0 per cent. ELAR industry average stood at 16.2 per cent for the year-end, based on regulatory statistics.
NBF continued with its prudent and transparent approach towards proactively recognising and providing for problem accounts. Net impairment charge was AED 85.9 million compared to AED 72.6 million in the corresponding period of 2016 and AED 162.3 million in Q4 2016. The NPL ratio was 5.11 per cent compared to 4.95 per cent as at 31 December 2016. Total provision coverage ratio was 92.1 per cent compared to 101.3 per cent as at 31 December 2016. Total provision coverage including collaterals improves to 103.9 per cent.
Return on average assets was 1.4 per cent and return on average equity was 11.0 per cent.
NBF’s rating was re-affirmed at Baa1/Prime-2 for deposits and A3 for counterparty risk assessment by Moody’s, with a stable outlook, highlighting the bank’s underlying strength, prudent risk management and resilience.