Union National Bank announces results for 2008

The operating profit of Dhs1,653.7m (2007: Dhs1,196.5m) increased by 38.2% over the previous year's outturn reflecting satisfactory performance especially given the extremely challenging business environment and difficult trading conditions that exists globally.

Commenting on the results, Mr. Mohammad Nasr Abdeen, Chief Executive Officer of UNB said, "Amid the global financial turmoil and the unprecedented economic downturn facing most of the major economies in the world, the results for UNB Group for the year ended 31 December 2008 were satisfactory with the UNB Group posting its highest ever profit."

He added that the Bank remained vigilant to effectively manage and mitigate various risks to protect the interests of various stakeholders, as 2009 remained an equally challenging year.

Key financial indicators have continued to register an improvement with attributable return on average equity of 19.9% (2007: 18.7%) and return on average assets of 2.4% (2007: 2.4%). In spite of the inflationary pressures and ongoing investments in infrastructure and human capital the efficiency ratio (cost to income) for the year 2008 improved to 27.9% (2007: 29.4%).

The ratio of non-performing loans to gross loans was 0.7% as at 31 December 2008 (31 December 2007: 0.9%) and the coverage ratio, which has been over 100% in the recent years, further improved to 170% at the year end (31 December 2007: 143%). In 2008 the Bank took additional collective impairment of around Dhs120m, thereby increasing the general provisions to Dhs329m, which constitutes 0.6% of the gross loans and advances as at 31 December 2008.

The loans and advances grew to Dhs50.4bn as at 31 Dec 2008 (31 Dec 2007: Dhs37.4bn), an increase of 34.9% year-on-year. The loan growth was funded mainly by customers' deposits which increased by 23.1% to Dhs49.5bn as at 31 Dec 2008 (31 Dec 2007: Dhs40.2bn). Overall the consolidated total assets reached Dhs65.2bn as at 31 Dec 2008 (31 Dec 2007: Dhs55.5bn), a growth of 17.6% over the last year.

The Board of Directors have recommended a distribution of cash dividend of 10% and stock dividend of 10% for approval of the shareholders in the Annual General Meeting. The results for 2008 are subject to the approval of the Central Bank of UAE.

As part of the initiative by the Government of Abu Dhabi to inject additional capital into certain Abu Dhabi financial institutions, the Bank recently announced that it will issue Tier 1 capital notes to the Government of Abu Dhabi, with a principal amount of Dhs2bn (the 'Notes').

The Notes are non-voting, non-cumulative perpetual securities and are callable subject to certain conditions. The issuance of the Notes will ensure that the Bank continues to maintain strong capital position to support business growth on a sustainable basis.