NBAD reaches profits of AED2.6 billion and total assets of AED84 billion

Earnings per share were AED2.74. Revenues were AED3.4 billion, up 97% on 2004. Fees and commissions and other operating income represented 51% of revenues; net interest 49%. Costs rose 28% to AED622 million reflecting the bank's continued investment in people, systems, new products and new outlets. The cost income ratio in 2005 was 18% which is very low by any objective standard, and compares with 28% in 2004 which figure is closer to the average cost income ratio the bank expects over the full economic cycle.

Net new provisions for bad and doubtful debts were AED155 million which reflects a cautious provisioning policy. Impaired loans are now more than 100% covered by provisions. The tax provision increased to AED54 million, in line with growing overseas earnings.

Total assets of the bank reached AED83.7 billion at the end of 2005, up 49% from year end 2004. Total capital resources reached AED7,324 million, up 41% from 2004, all the increase being accounted for by the bank's own earnings, and without any new shareholder contributions. The net return on average shareholder's equity - the key ratio for any business - reached 44% in 2005, substantially ahead of the 25% average target set in the bank's 5 year full plan.

Investment banking earnings increased 233% over the year on the back of active and rising local equity markets. The investment bank contributed 43% of the group's operating profits in 2005. Profits from the domestic banking business increased 107% and represented 44% of group profit. The remaining 13% of group profit is accounted 11% and 2% by the international bank and the head office, respectively.

Commenting on the results, the Chief Executive of NBAD, Michael H Tomalin, said:

"These are sparkling results. In the last 6 years our profits have increased by a compound average growth rate of 42%, from AED311 million in 1999 to AED2.6 billion this year. Buoyant local equity markets have helped our results this year. But we were well placed, having invested earlier in the businesses, to take advantage of favourable market conditions".

Tomalin, when asked to comment on prospects for 2006 said: "2006 is likely to be a tougher year. Our return on equity and cost income ratio are better than trend line and are likely to adjust from these levels in the medium term. However, the bank is well placed to benefit from the accelerating pace of change and investment in the UAE, and Abu Dhabi in particular, and the relative performance of NBAD is likely to remain good".