NBAD's Q3 net profit rise 41% to Dhs914m

Cumulative profits for the nine months amounted to Dhs2,591m, 2.5% up on the comparable period of 2008 and representing an annualised EPS of Dhs1.53 compared with the previous corresponding period of Dhs1.51. Annualised return on equity (ROE) was 22.5% and in line with NBAD's target of 20% for the current year.

Net impairment charges for the quarter were Dhs284m of which collective provisions were Dhs142m, specific provisions and write-off charges were Dhs180m, mitigated by recoveries of Dhs38m. Total provisions for non-performing assets reached Dhs2,254m of which Dhs1,288m were collective and Dhs966m were specific.

Impaired assets increased by Dhs219m in the quarter totaling Dhs1,541m. The Non-performing loans ratio stood at 1.2% with a coverage of 146%.

H.E. Nasser Ahmed Khalifa Alsowaidi, Chairman of NBAD said,

"The UAE banking sector remains stable assisted by a proactive regulatory framework that has contributed to the resilience of the banking system under the present tough global financial conditions. NBAD's robust risk management practices and no exposure to exotic products in its banking model reflect the prudence of the bank's risk strategy and the quality of its banking businesses."

Total assets amounted to Dhs186bn at the end of the 3rd quarter 2009, up from Dhs165bn as at 31 December 2008. For the first time in the history of the bank, assets exceeded $50bn. Customer deposits increased by 6.8% and loans by 14.7% compared with 31 December 2008.

Capital resources, including the Dhs4.0bn of Abu Dhabi Government Tier I capital and Dhs2.8bn subordinated convertible notes reached Dhs23.1bn, up 33% from Dhs17.4bn compared with 31 December 2008. As at 30 September 2009, the Basel II capital adequacy ratio was 18.4% and the Tier I capital ratio 15.7%.

At the beginning of September 2009, NBAD issued a 5-year Medium Term Note for $850m under its EMTN Programme. The transaction book order was 4.8 times oversubscribed with a broad global range of investors. NBAD was the first bank in the region to tap the market and the coupon was 4.5% fixed. During the same month, NBAD also issued Medium Term Notes totalling HK $1,023m, or $132m equivalent, in three separate private placements.

Better margins, more business and funding cost management led to a 36.7% improvement in net interest income of Dhs3,343m for the nine months of 2009 compared with Dhs2,445m for the corresponding period of 2008. For the nine month period, fees and commissions and other non-interest income were slightly lower by 3.7% at Dhs1,452m from Dhs1,508m, but 43% higher at Dhs528m for the third quarter 2009 compared with the third quarter 2008.

Operating expenses for the nine months rose by 30%, which resulted in a cost income ratio of 28.5% compared with 26.5% for the nine months of 2008, below our cap of 35%. Operating expenses growth reflects the ongoing disciplined investment in our franchise, people, network and infrastructure as we expand organically throughout the region.

Operating profits from the Group's divisions for the nine months of 2009 were Dhs3,431m. Domestic Banking's (comprising consumer, commercial and elite banking) operating profits of Dhs654m represented 19% of NBAD's operating income. Financial Markets contributed Dhs686m or 20%; International Banking's profit contribution was 12% or Dhs407m and Corporate & Investment Banking's contribution totaled Dhs1,495m or 44%. Islamic business earned Dhs40m and Global Wealth Dhs21m a combined contribution of 1.8%. Head Office is run like a business and contributed Dhs128m before any collective provisions which are carried centrally in the Group's head office account.

Chief Executive Michael Tomalin said, "For the first time this year, we are ahead of historic 2008 earnings comparables. Nevertheless, we have again, in this quarter, been able to make substantial voluntary collective provision to put us in a strong position to face any credit challenges ahead."