Browse
related articles
Commenting on the results, Mr. Mohammad Nasr Abdeen, Chief Executive Officer, Union National Bank said "The continued focus on the core lines of businesses has led to a steady growth in profits and further strengthening of the strong financial position of the UNB Group". Mr. Abdeen added that "it was truly gratifying that the Bank's commitment to attain and sustain high standards of Quality in all our endeavours had been recognized with the Bank recently being awarded the Sheikh Khalifa Excellence Award - Diamond Category 2012, becoming the first ever Bank to receive such a prestigious award."
The operating income and operating profit both maintained a steady uptrend. The operating profit for the nine month period ended 30 September 2012 grew by 7.2% over prior period to reach Dhs1,808m (nine month period ended 30 September 2011: Dhs1,688m). Similarly, the operating income for the nine month period ended 30 September 2012 grew by 7.1% over prior period to record Dhs2,379m (nine month period ended 30 September 2011: Dhs2,221m). The increase in operating income was due to an increase in net interest income and net income from Islamic financing which rose to Dhs1,902m (nine month period ended 30 September 2011: Dhs1,767m), up by 7.6% over the prior period and an increase in non-interest income which rose to Dhs478m (nine month period ended 30 September 2011: Dhs454m), up by 5.2% over the prior period. The basic and diluted earnings per share for the nine month period ended 30 September 2012 was Dhs0.53 (nine month period ended 30 September 2011: Dhs0.50)
The increase in net interest income was principally due to an active management of the funding costs and optimization of liquidity levels, whilst ensuring that the Group carried sufficient liquidity buffers. The higher non-interest income was mainly due to an increase in income from dealing in foreign currencies and trading and non-trading financial instruments which cumulatively increased by 286.2% in the nine month period ended 30 September 2012 to Dhs114m (nine month period ended 30 September 2011: Dhs30m). However, for the period under discussion the fee and commission income reduced to Dhs325m (nine month period ended 30 September 2011: Dhs364m) which was mainly due to the implementation in 2011 of the Central Bank of the UAE guidelines on lending to individuals.
Compared to prior period the loans and advances of Dhs56.6bn as at 30 September 2012 were up by 1.6%. However, compared to 2011 year-end there was a nominal decline in the loans and advances as the Group maintained its prudent lending approach. The customers' deposits reached Dhs55.3bn as at 30 September 2012, up by 5.2% compared to the prior period. The decline in customers' deposits compared to 2011 year-end was mediated to achieve a balance between profitability and liquidity needs of the Group. The loan to deposit ratio was 102.5% as at 30 September 2012, compared to 106.1% as at 30 September 2011 and 95.5% as at 31 December 2011, albeit liquidity buffers remained adequate with both liquid assets to total assets ratio and the UAE Central Bank mandated advances to stable resources ratio indicating adequate liquidity. The total assets of the Group as at 30 September 2012 were Dhs78.0bn, up by 1.5% year-on-year.
In keeping with the Group's strategy to invest prudently for sustainable future growth, investments in the areas of infrastructure, technology and human capital led to operating expenses increasing by 6.9% in the nine month period ended 30 September 2012 to Dhs571m (nine month period ended 30 September 2011: Dhs534m). The cost to income ratio at 24.0% for the nine month period ended 30 September 2012 (nine month period ended 30 September 2011: 24.0%) is among the best in the UAE banking sector.
The ratio of non-performing loans and advances to gross loans and advances was 4.7% as at 30 September 2012 (31 December 2011: 3.7%), a slight improvement compared to that as at the preceding quarter end. The loan loss coverage was 68.1% as at 30 September 2012 (31 December 2011: 74.7%). The impairment charge on financial assets, comprising mainly of the specific provisions taken in the nine month period ended 30 September 2012 was Dhs323m (nine month period ended 2011: Dhs302m), up by 6.8% compared to prior period. The general provisions constituted 1.14% of the total credit risk weighted assets as at 30 September 2012 (31 December 2011: 1.07%).
The annualized return on average equity, excluding the Tier 1 capital notes, for nine month period ended 30 September 2012 was 17.0% (nine month period ended 30 September 2011: 17.7%) with the annualized return on average assets for the nine month period ended 30 September 2012 being 2.4% (nine month period ended 30 September 2011: 2.3%). Capital adequacy continued to remain strong with overall Basel II capital adequacy ratio being 24.4% as at 30 September 2012 (31 December 2011: 21.9%), further buttressed by the current period profit.
Posted by Rana Mesbah
