National Bank of Abu Dhabi H1 net profits reach Dhs1.7bn

First half operating profits reached Dhs2,215m, 7.8% up on the first half of 2008. Net profits, after collective and specific provisions for non performing assets, and overseas taxes, were Dhs907m in the second quarter, up 17.7% on the Dhs770m reported in the first quarter. Half year net profits are Dhs1,677m, 10.6% down on the first half of 2008. In the first half of 2008 total net provisions were Dhs145m; in the first half of 2009 net collective and specific provisions are Dhs355m higher at Dhs500m.

Annualised earnings per share were Dhs1.49 down from Dhs1.70 for the comparable period of 2008.

The Chairman of NBAD, H.E. Nasser Ahmed Khalifa AlSowaidi said, "Despite the prevailing uncertain global market conditions, NBAD achieved good financial results for the second quarter and first half, reflecting the resilience of the Group's diversified business model and prudent risk policies. The global outlook remains uncertain, but the strong investment in infrastructural projects by the government, is expected to support the economic growth of Abu Dhabi and counter, to some extent, the slowdown in the economy."

Total assets increased 12.3% and 9.4% over the 1st quarter of 2009 and 2nd quarter of 2008 respectively, to reach Dhs181bn. NBAD achieved a return on equity of 22.8% for the first half of 2009, which is in line with the Group's overall plan of 20% for 2009 and medium term ROE of 25%.

Customer deposits, including Dhs5.6bn received from Ministry of Finance in the last quarter of 2008, showed a healthy improvement of 14.1% quarter-on-quarter and an increase of 25.1% to Dhs112bn compared with 1st half of 2008.

Loans and Advances to customers increased by 16.7% over the 1st half of 2008 to Dhs124bn and 7.2% compared with the 1st quarter of 2009.

Impaired assets increased by Dhs251m (Dhs76m from the first quarter of 2009) from Dhs1,072m as at 31 December 2008 to Dhs1,323m, on a portfolio of Dhs124bn. This represents 1.1% of the loan portfolio.

Net impairment charges for the quarter were Dhs286m of which collective provisions were Dhs145m (charged centrally), specific provisions were Dhs160m, mitigated by net recoveries of Dhs19m. Total provisions increased by Dhs274m in the quarter to reach Dhs2,024m of which Dhs1,146m is collective provisions.

The Group has $7.5m exposure to the Al Gosaibi group and holds $3.4m of a Saad group sukuk on a mark-to-market basis.

Cash and balances with Central Bank amounted to Dhs14.7bn, 1.8% up on the 1st quarter of 2009, but 40% down from Dhs24.6bn for the 1st half of 2008, due to excess speculation money in last year's balances.

Capital resources reached Dhs21.9bn, up 30.9% from the corresponding period in 2008 on the back of profit retention and capital injection from the Government of Abu Dhabi in the form of Dhs4bn, Tier I notes. The Tier I capital ratio on Basle II principles is 15.5% on 30 June and capital adequacy is 17.8%.

Higher volumes and a widening of margins led to a 35.1% increase in Net Interest Income to Dhs2,162m compared with the 2008 corresponding half year period. Fees, commissions and other non interest income were higher by 71% over the first quarter but lower by 18.9% on the comparable period in 2008, which includes the Dhs165m profit on sale of land.

Operating expenses for the 2nd quarter of 2009 were almost unchanged from the first and within our budget and plan, but 27.2% higher than the corresponding 1st half of 2008 as we maintain our investment in skilled and innovative people, continue our organic expansion and upgrade of our network, infrastructure and systems. The Cost income ratio at 28.2% is well within our cap of 35% over the medium-term.

Operating profits of Dhs2,215m were delivered by the Group's divisions for the quarter under review: Domestic Banking (comprising consumer, commercial and elite business) operating profits of Dhs412m represents 18.6% of NBAD's top-line profits; Financial Markets contributed Dhs479m or 21.6%; International Banking delivered Dhs270m, representing a 12.2% contribution; Corporate and Investment Banking excelled with a 41.5% contribution or Dhs919m. Islamic business contribution was Dhs15m and Global Wealth was Dhs12m, a combined contribution of 1.2%. Head Office, which is run like a business, contributed Dhs108m before any collective provisions which are carried centrally in the Group's head office account.

All NBAD's superior credit ratings have been affirmed by Moody's Aa3, Fitch AA- and S&P's A+. NBAD remains one of the highest rated banks in the region and comparable with many medium sized European banks. NBAD has been rated amongst the world's safest banks by Global Finance and the best bank in the UAE by Euromoney.

Chief Executive Michael Tomalin said, "NBAD's strong performance in the 1st half of 2009 is attributed to staff dedication and strong leadership within the Group. The global environment remains volatile and challenging but we are confident that our strong franchise and balance sheet will ensure that the Group will weather these turbulent conditions. We remain cautious and maintain our strategies of risk mitigation and business focus to ensure sustainable growth for our stakeholders. We continue to build our capital resources and collective provision to put us in the best possible position for the future."