NBAD reports 3rd quarter earnings

Annualised earnings per share were AED2.87, 153% above the corresponding period of 2004. The annualised return on equity reached 45% compared with 23% in 2004.

For the third quarter, net profits were up 131% on the corresponding quarter of 2004 reflecting strong performances and increased recoveries. "We are delighted with this outstanding record breaking performance driven by the underlying strong performance of our domestic and investment banking businesses, and the growth in the UAE economy and local stock market", said Michael H. Tomalin, Chief Executive of NBAD.

The strength of the local stock market contributed to exceptional results in the bank's asset management and brokerage businesses", added Michael Tomalin.

Total assets reached a record AED77 Billion at the end of the 3rd quarter of 2005, up 56% over the same period for 2004, with customer deposits and loans up 48% and 33% respectively. Shareholders' equity reached AED 6.8 Billion entirely from retentions.

Operating income for the first three quarters of 2005 was AED 2.6 Billion including non-interest income of AED 1.4 Billion, 197% up on the corresponding period in 2004 reflecting the focus on diversifying our fee earning sources. Overall, operating income rose 125% year on year, outpacing the expense growth of 29%, resulting in the cost-income ratio improving from 29% in the first three quarters of 2004 to 17% in the same period of 2005. Going forward, the bank will continue to invest, as planned, in infrastructure, systems, network and people and manage the bank at a cost-income ratio of 35% over the economic cycle.

Domestic Banking profits were up 127% and Investment Banking 462% over the counter period in 2004, Investment banking earnings were strongly influenced by the performance of the broking and asset management businesses which both benefited from active and rising local stock markets.

Net impaired asset provisions were AED 119 Million at the end of the 3rd quarter of 2005 due to portfolio provision created as a prudent measure and to reflect the growth of our credit portfolio. Overall, provisions are modest in comparison with the size of the Bank's business and reflect our relatively conservative credit strategy.

NBAD received the best "e-banking in the Middle East" award in recognition of technological innovation.

Looking forward, Mr Tomalin said, "These first class results are substantially above trend line and are not sustainable in the medium term at these levels, being flattered by strong local equity markets. Nevertheless, the bank's underlying performance continues to be strong, and the result for the full year is likely to demonstrate this. The bank remains well positioned to take advantage of current growth opportunities and play a significant part in the economic development of the nation".