First Gulf Bank announces financial results for the second quarter of 2009

The net profit for the first half of this year stood at Dhs1,526m, that's also 3% higher than the Dhs1,484m generated during first half of 2008.

Total Operating Income generated in the first six months of 2009 stood at Dhs2,632m, which is 17.5% higher than the total Operating Income generated in the same period of 2008.

"Quarter after quarter, FGB has been consistent in delivering sustained growth results and exceeding expectations. 2009 continues to be a challenging year for the entire banking industry. Our performance has been a strong evidence on the bank's ability to navigate the current difficult market conditions, thanks to the Board's clear vision and well-thought conservative strategy,"

said André Sayegh, FGB's Chief Executive Officer.

The Earning Per Share was Dhs0.97 for the first six months of the year, compared to Dhs1.08 for the same period of 2008.

Core Banking businesses; namely Corporate, Retail, Treasury, Investments and Islamic Banking generated a solid 96% of the total half year net profit.

"Our core banking businesses remain of high strategic importance as they continue to outperform. Along this line, we will pursue our strategy to develop innovative products, enhance our offerings and the quality of services, which we provide to our customers," added Sayegh.

Net interest and Islamic financing for the quarter at Dhs958m is 54% higher than the same quarter of last year and 9% higher than the first quarter of 2009. That makes the total of the first two quarters of the year at Dhs1,833m which is 75% better than the same period of last year. The Net Interest Margin improved from 3.59% in the first quarter of 2009 to 3.75% in the second quarter of 2009.

Fees and Commission generated by the Corporate and Retail businesses during the first six months of 2009 stand at Dhs614m, that is 11% better when compared to the same period of last year.

The bank successfully managed its expenses in an efficient manner, with total expenses of the quarter decreasing to reach Dhs257m, down from Dhs293m in the first quarter of 2009, and much lower than the Dhs411m in the last quarter of 2008.

Cost to Income Ratio reduced to 20.9% at the end of June 2009 when compared to 24.2% at the end of December 2008.

"Wisely managing expenses is another important element for maintaining an optimum level of profitability, this falls totally in line with the bank strategy to maintain efficiency across our organization, both in term of generating revenues and controlling expenses," commented Sayegh.

During the quarter additional loan portfolio general provisions of Dhs260m were taken over and above the Dhs220m booked during the first quarter of 2009. The total loan provisions on the balance sheet stood at Dhs1.6bn by the end of June 2009, representing 1.8% of the total Gross Loans.

This includes an adequately earmarked provision for FGB's exposure to Al Gosaibi and Saad groups. The Non Performing Loans to Gross Loans Ratio by the end of second quarter of 2009 was at 1.1% and the Provision Coverage Ratio at 165%.

At the closing of the first half of 2009, FGB reported also a very strong balance sheet with Total Assets at Dhs118.6bn, 10% higher than December 2008. During the same period, Deposits increased by 13.2% to reach Dhs83.7bn, while Loans increased by 8.4% to reach Dhs86.0bn.

With Deposits growing faster than Loans, the Loan to Deposit Ratio improved during the second quarter of 2009 from 110% to 103%. Total Shareholders' Equity stood at Dhs21.4bn, leading to a healthy Capital Adequacy Ratio at 18.3%, which will further increase to 22.2% after conversion of the Ministry Of Finance Deposits into Tier II Capital.

"With such levels of prudent loan provisions, high liquidity and high capitalisation, the bank is in a very comfortable position to continue with its conservative and diversified growth plans," said Sayegh

"We are very pleased with yet another quarter of solid performance. FGB will remain a source of strength in the banking industry in the region. We reiterate that, with the Board vision and proactive management we will achieve our set targets for the full year. We are fully confident, that due to its strong fundamentals, the UAE economy will pick up over the coming quarters," concluded Sayegh.