NBAD Q1 net profits soar 45% to Dhs875m

Total assets reached Dhs157bn, up 41% from March 2007.

"Three records were set this quarter. First, the Bank recorded an all-time high quarterly profit. Second, assets reached Dhs157bn ($43bn) for the first time, and third, the Bank's capital resources exceeded Dhs16bn" said Mr. Michael H. Tomalin, NBAD's Chief Executive.

"First quarter profit of Dhs875m benefited from a one-off gain of Dhs165m (net of expenses) on the sale of land purchased as a regional office site in Northern Emirates but subsequently exchanged for another. Core earnings are therefore Dhs710m in the first quarter, after an increase in portfolio provisions of Dhs60m, mirroring the growth in our loan portfolio. Impaired loans, as at 31 March 2008 were Dhs855m, 110% covered by provisions," Mr. Tomalin explained.

Dhs13bn after the payment of the Dhs659m cash dividend, first quarter retained earnings, and Dhs1.4bn of new equity following the partial conversion of the 2006 convertible issue. After a new Dhs2bn convertible was issued in the first quarter of 2008, and the reduction of Dhs1.4bn of the 2006 convertible issue following the partial conversion, the total capital resources of the Bank now exceed Dhs16bn and position the Bank for continued growth.

Loans and advances to customers reached Dhs93bn, up 51% on the 31 March 2007 comparable. The growth in advances is strong, reflecting, in particular, the demand in Abu Dhabi to finance the substantial growth in the Emirate.

Customer deposits rose 29% over the year to Dhs92bn. Cash and balances with Central Bank were Dhs39bn at the end of March 2008, 160% above the levels in March 2007, reflecting the Bank's strong dirham liquidity position.

Operating income for the quarter reached Dhs1,286m, 53% up on the first quarter of 2007. Expenses rose to Dhs328m, 46% up on March 2007, reflecting the Bank's continued investment in its people, brand, systems and network.

Operating profit, before provisions and tax, was Dhs958m, 56% above the first quarter 2007. The impaired assets charge in the first quarter was Dhs68m compared with no charge in the March quarter of 2007. Total new provisions in the quarter were Dhs100m of which Dhs60m was new portfolio provisions, and recoveries were Dhs32m.

All the businesses performed well with the operating profits of Domestic Banking reaching Dhs486m, International Banking reaching Dhs147m, and Investment Banking businesses contributing Dhs171m. Islamic and Private banking businesses are progressing. Head Office, which is run like a business, did well with profits of Dhs153m.

The Group's return on equity was 29.7% in the first quarter, above our 25% medium term target. The cost income ratio was 25.5%; again below our 35% medium term expected level.

NBAD has one of the highest credit ratings in the region comparable with many medium sized European banks.

Commenting on the results, NBAD's Chief Executive said: "These are a strong set of results reflecting our disciplined approach to creating shareholder value in a rapidly expanding UAE market place during a period of serious global financial turbulence."

"The Bank has progressed across a broad front investing in its franchise, its people and its systems and we remain well placed to take advantage of the huge growth opportunities in Abu Dhabi and the region, and play a significant part in the economic development of the UAE".

"The return on equity of 29.7% is one of the best in the industry, both locally and internationally," Mr. Michael Tomalin added.

"Considering the year as a whole, we expect to see continued positive growth for the balance of the year, in line with our objectives to achieve an average 20% growth in earnings over the economic cycle, and an average return on equity of 25% at a cost income ratio not to exceed 35%. Although we have done well, there remains a great opportunity to grow much larger still," Mr. Tomalin confirmed.