NBAD reports first quarter earnings

The first quarter annualised earnings per share of AED 2.13 (restated following the 10-to-one stock split in March 2005) represent a 132% increase over the prior year period of AED 0.92 (restated). The annualised return on equity is 38.6% compared with 19.2% in the corresponding 2004 quarter.

"NBAD's first quarter strong performance reaffirms our commitment to the three pillars of our long term plans: focus on the customer, development of our people and rewarding our shareholders", said Michael H. Tomalin, Chief Executive of NBAD. "We have set new and demanding targets in our next 5 year plan 2005-2009 and the first quarter results are an excellent start", added Mr. Tomalin.

All the businesses performed well, and one exceptionally so. The Domestic Bank's operating profits rose 51% to AED 171 million. International profits were up 14% to AED 66 million. Investment Banking performed exceptionally well, driven by our asset management and brokerage business in UAE, with profits reaching AED 270 million.

Operating income rose 96% to AED0.67 billion on the back of substantial growth in non-interest income. For the first time in the history of the bank, non-interest income of AED369 million exceeded the interest income level. Expenses rose 25% over the corresponding quarter in 2004, and as a result the cost income ratio fell to 20%, well below our target 30/35%.

Business volumes continued to grow with total assets reaching AED 56.5 billion at the end of the first quarter, 20% higher than in the first quarter of 2004. Capital resources increased 22% to reach AED 5.2 billion in the first quarter of 2005. Loans increased by 19% from AED 32 billion in the first quarter of 2004 to AED 38 billion in the first quarter of 2005, while deposits increased 23% from AED 33 billion to AED 41 billion for the same period.

Net new provisions were AED 17 million compared with AED 8 million in the first quarter of 2004. Provisions are modest in comparison with the size of the Bank's business and reflect our relatively conservative credit strategy and above average asset quality.

NBAD remains strongly committed to emiritisation with the level reaching 25%.

The first quarter result benefited from the exceptional performance of the local stock markets at the start of 2005, which may not necessarily be repeated in future quarters. Even so, stripping out these very favorable trading conditions, underlying profits of the bank continue to grow strongly.