First Gulf Bank reports strong financial results

André Sayegh, FGB's Chief Executive Officer, said:

"At a time where the global economy is witnessing slow recovery, FGB stands out as a solid financial institution, delivering a strong performance. Our results for the quarter demonstrate our ability to successfully weather the crisis that affected the world and emerge even stronger. The results reconfirm, that FGB's business model is built on solid foundations."

"Thanks to FGB's visionary board of directors, experienced management, sound business strategy, and dedicated staff, we are able, quarter after quarter, to provide the best returns to all our stakeholders," added Sayegh.

The Total Operating Income for the quarter at Dhs1,688m is 29% higher than the previous quarter, and is 42% higher than same quarter of last year.

In line with the Bank's strategy of diversification of revenue drivers, the product mix contribution to the revenue of the quarter is as follows: 58% from interest and Islamic finance, 18% from Corporate and Retail fees and commissions, 11% from Foreign Exchange, Derivatives and Investment Income, and 13% from Subsidiaries and Associate companies.

"The bank has long recognised the importance of revenue diversification and it remains one of the main strategies for our future growth. FGB's business model commands the power of revenue generation and is built to deliver solid and consistent returns," said Sayegh.

Net Interest and Islamic Financing for the quarter at Dhs985m is 3% higher than Q2 of 2009, and is 31% higher than the same quarter of 2008, this trend represents an important growth potential for this area.

Dhs2,456m was the Net Profit for the first nine months of 2009, which is 5% higher than the same period of last year. 88% of the Net Profit was generated by the Core Banking Businesses and the remaining 12% was generated by the Subsidiaries and Associate Companies.

"Our Core Banking Businesses remain the engine driving our growth and are behind our strong financial results. Simultaneously, we continue to focus on our Subsidiaries and Associate Companies; beside complementing our core operations, they also carry a strong future earning potential," commented Sayegh.

This outstanding achievement was mainly the result of a strong balance sheet which generated Dhs2.8bn of Net Interest and Islamic Financing income. This was 56% higher than the Dhs1.8bn generated in the first nine months of 2008. The Bank's Net Interest Margin for the first nine months of the year was maintained at the 3.6% level compared to 3.7% by end of June 2009.

Expenses maintained the decreasing trend which started in the first quarter of 2009. During the third quarter, expenses reached Dhs248m, which is lower than both first and second quarters of 2009 of Dhs293m and Dhs257m respectively, and much lower than the fourth quarter of 2008 of Dhs411m.

"FGB has always set an example for Efficiency. Acting timely and adequately managing both ends of the income statement in terms of expenses and revenues, enabled us to achieve optimum levels of profitability quarter after quarter. The bank remains one of the most efficient and most profitable organisations in the region," said Sayegh.

The total Operating Expenses reached Dhs799m by the end of September 2009, which is 10% higher than the same period of last year. The Cost to Income Ratio for the first nine months of the year was at 18%, which is lower than the 21% achieved at the end of September 2008.

For the first nine months of 2009 the Earning Per Share (EPS) stood at Dhs1.52, compared to Dhs1.66 at end of September 2008.

"Earning Per Share remains a primary focus for FGB. We continue to deliver our commitment and maximise value and profit to our shareholders," commented Sayegh.

In line with the bank strategy to maintain a strong balance sheet, additional loan portfolio provisions of Dhs490m were taken during the third quarter of 2009, over and above the Dhs220m and Dhs260m booked respectively during the first and second quarters of 2009. By end of September 2009, the Provisions to Gross Loans outstanding on the Balance Sheet stood at 2.1%, compared to 1.8% by the end of June 2009. The Non Performing Loans to Gross Loans Ratio by the end of third quarter of 2009 was at 1.4% and the Provision Coverage Ratio was at 153%.

On Al Goseibi and Saad Groups, FGB is following the Central Bank of the UAE guidelines for provisioning. The bank's total exposure to the two groups is $104m, ($55m on syndications and $49m on trade business). In the second and third quarters of 2009, a total of Dhs70m in provisions were booked. "Over the coming five quarters ending in 2010, the bank would take an additional Dhs174m into provisions, which should be easily absorbed by the existing high level of general provisions and by the strong earning momentum of FGB," assured Sayegh.

At the end of the third quarter of 2009, the Total Assets of the bank were at Dhs124bn, which is 16% higher than the Total Assets by end of 2008. During the same quarter, the Loans and Advances witnessed a controlled growth of 4.6% to reach Dhs90bn, while Deposits grew by 6.7% to reach Dhs89.4bn. This improved the Loan to Deposit Ratio to 101%, down from the 107% in December 2008, 110% in March 2009 and 103% in June 2009.

Shareholders' Equity stood at Dhs 22bn by end of September 2009, the second highest in the UAE's banking sector, and the Capital Adequacy Ratio (CAR) at 18.8%. The bank is yet to convert the Dhs4.5bn deposit from the Ministry of Finance to Tier II Capital, which will raise the existing CAR by an additional 4% once converted.

"Having a clear vision, combined with a sound business strategy is critical to the success of our growing organisation. FGB is poised to build on its successes and continues to generate more value for its shareholders given its very strong financial position." concluded Sayegh.