Union National Bank announces results for six month period ended 30 June 2009

UNB recorded a consolidated profit of Dhs575.3m for the six month period ended 30 June 2009 as compared to Dhs764.6m for the first half of 2008. The continuing challenging market environment, led to a decline in the net profit mainly due to the fair value loss on investment properties and the higher impairment charge on loans and advances, recognized by the Group.

Commenting on the results, Mr. Mohammad Nasr Abdeen, Chief Executive Officer, UNB, said:

"UNB with its conservative lending policies and prudent provisioning approach is well positioned to tide over this unprecedented global economic condition."

The Group's income from core activities continues to be steady as reflected by a growth of 19.2% in the net interest income in the first half of 2009 as compared to the corresponding period of previous year. The loans and advances grew to Dhs49.5bn as at 30 June 2009 (30 June 2008: Dhs47.3bn), an increase of 4.7% y-o-y.

Due to the tough market conditions and slow down in the economy, there was a nominal decline in the loans and advances as at 30 June 2009 compared to the position at 2008 year-end. In order to maintain adequate liquidity, the Group has been focussing its efforts to grow and diversify its stable customers' deposits base.

The customers' deposits increased by 7.3% to Dhs51.2bn as at 30 June 2009 (30 June 2008: Dhs47.7bn), with the credit deposit ratio being below 100% at 96.8%. The consolidated total assets reached Dhs71.0bn as at 30 June 2009 (30 June 2008: Dhs64.7bn), a growth of 9.7% over the last year.

During the three month period ended 30 June 2009, the Bank has taken adequate provisions for its limited credit exposure to the Al Gosaibi Group. The Bank does not have any credit exposure to the Saad Group.

The attributable return on average equity (annualized) for the first half of 2009 was 14.9% with the return on average assets (annualized) being 1.7%. The Group maintains a close vigil on the costs whilst ensuring that we continue to invest and build the infrastructure to support growth in the medium term once market conditions improve. The efficiency ratio (cost to income) for the first half of 2009 was 31.3%.

The Bank has exercised the option to convert the Ministry of Finance deposits to subordinated Tier 2 capital which would bolster the capital adequacy position to exceed 22%, once the necessary formalities for conversion are completed. Following the issuance of Tier 1 Capital Notes to the Government of Abu Dhabi in the first quarter of 2009, the capital adequacy position has improved significantly with the overall capital adequacy ratio being 16.9% as at 30 June 2009 comprising mainly of Tier 1 regulatory capital base.