National Bank of Fujairah announce its results for the nine month period ended 30 September 2021 with profit up 36.4%.
Highlights:
- NBF achieved a net profit of AED 90.4 million for the nine month period ended 30 September 2021, an increase of 36.4% over the corresponding period of 2020 driven by improving underlying business momentum and good progress across the bank’s digitalization program. The net profit was substantially higher by 1,063.3% for the three month period ended 30 September 2021 compared to the corresponding period of 2020.
- Supported by higher fee income and investment income, NBF posted an operating profit of AED 243.4 million in the third quarter of 2021, a rise of 30.9% quarter-on-quarter, and an increase of 5.4% for the nine month period compared to 2020 reaching AED 745.4 million. This reflects a high level of resilience in the bank’s core business and enhanced balance sheet management in the prevailing low interest rate environment.
- Operating income growth of 17.5% and 2.1% was recorded for the three month and nine month periods ended 30 September 2021 respectively over the corresponding periods of 2020. It stood at AED 1.08 billion for the nine month period ended 30 September 2021 compared to AED 1.06 billion in the corresponding period of 2020, recuperating from the mass disruptions caused by the COVID-19 pandemic globally.
- Net interest income and net income from Islamic financing and investment activities grew 14.3% in the three month period ended 30 September 2021 over the corresponding period of 2020. It stood at AED 709.3 million for the nine month period ended 30 September 2021 compared to AED 722.1 million in the corresponding period of 2020.
- Net fees, commission and other income rose 13.2% to AED 251.8 million for the nine month period ended 30 September 2021 compared to AED 222.3 million in the corresponding period of 2020. It was up 30.3% for the three month period ended 30 September 2021 compared to the corresponding period of 2020.
- Foreign exchange and derivatives income reached AED 82.0 million for the nine month period ended 30 September 2021 compared to AED 99.1 million in the corresponding period of 2020.
- Income from investments and Islamic instruments marked a substantial improvement to AED 41.6 million during the nine month period ended 30 September 2021 compared to the corresponding period of 2020. Unrealised gain on fair value through other comprehensive income (FVOCI) investments stood at AED 54.0 million.
- Operating expenses reduced by 4.4% to AED 339.3 million compared to AED 354.8 million in the corresponding period of 2020, demonstrating the measures adopted in line with the changing market conditions and our focus on exceptional customer service through digital adoption and innovation. Cost-to-income ratio reduced to 31.3% compared to 33.4% in the corresponding period of 2020 reflecting the compound effect of the savings in cost base and growth in operating income.
- NBF maintained its policy of prudent and transparent recognition of problem accounts. NBF secured net impairment provisions of AED 654.9 million for the nine month period ended 30 September 2021 compared to AED 641.0 million in the corresponding period of 2020. During the period, the bank’s impairment reserve reduced to AED 258.7 million compared to AED 283.5 million as at 31 December 2020. Total provision coverage ratio (including impairment reserves) stood at 83.1% compared to 91.8% as at 31 December 2020. The NPL ratio stood at 10.5% compared to 10.1% as at 31 December 2020. Excluding a few exceptional group exposures, the NPL ratio would reduce to 6.2% (31 December 2020: 7.3%).
- The capital adequacy ratio (CAR) is being kept at a recent high for the bank to support the bank’s ability to ride out any challenges arising out of the evolving operating landscape. CAR stood at 19.3% (Tier 1 ratio of 18.2% and CET 1 ratio of 13.9%) compared to 19.2% (Tier 1 ratio of 18.1% and CET 1 ratio of 14.0%) at 2020 year-end.
- Loans and advances and Islamic financing receivables rose by 2.4% to reach AED 25.43 billion compared to AED 24.84 billion at 2020 year-end; and up 0.2% compared to AED 25.37 billion as at 30 September 2020.
- Investments and Islamic instruments stood at the 30 September 2020 level of AED 4.6 billion compared to AED 5.2 billion at 2020 year-end evidencing the deployment of a portion of excess liquidity towards the high quality investment book to protect shareholder value.
- Customer deposits and Islamic customer deposits stood at AED 29.5 billion compared to AED 29.8 billion at 2020 year-end and AED 31.2 billion as at 30 September 2020. CASA deposits improved to a record high at 45.5% of total customer deposits compared to 38.0% as at 31 December 2020 and 32.2% as at 30 September 2020. Current and Saving Accounts (CASA) deposits increased by AED 2.1 billion to reach AED 13.4 billion compared to AED 11.3 billion as at 31 December 2020 cushioning the impact from the lower interest rates.
- Total assets rose by 2.2% to reach AED 40.7 billion compared to AED 39.9 billion at 2020 year-end and AED 41.8 billion as at 30 September 2020.
- Shareholders’ equity stood at the 2020 year-end level of AED 5.7 billion compared to AED 6.2 billion as at 30 September 2020.
- Ample liquidity was maintained with lending to stable resources ratios at 79.7% (2020: 82.1%) and eligible liquid assets ratio (ELAR) at 20.3% (2020: 20.8%), well ahead of all CBUAE minimum requirements.
- Return on average assets was 0.3%, up from 0.2% for the corresponding period in 2020.
- Return on average equity was 2.1%, up from 1.4% for the corresponding period in 2020.
- In line with the requirements of UAE Central Bank pertinent to minimum capital for banks, the bank increased its paid-up capital by way of issuing 85,238,116 bonus shares from retained earnings to reach AED 2 billion.
Dr Raja Al Gurg, Deputy Chairperson said:
“We are pleased with these encouraging set of results that demonstrate the return of growth across our operating and net performance and marked development in the implementation of our business and operational strategy. These results are after absorbing the substantial negative impact from a few exceptional exposures and COVID-19 pandemic relatively early to achieve augmented recovery in the economic cycle.
Although the pandemic has posed many challenges and caused considerable volatility, the prospects for an economic recovery are firmer now and the UAE’s economy has proven to be resilient in the face of adversity. Likewise, NBF’s resilient performance underpins its capability to steer through the changing operating landscape with a staunch business focus. Further, the Group retains strong capital adequacy and is well placed to support business growth and pace up shareholder value.
Whilst we stand at the cusp of great economic and digital change, we are working towards further building on best practices and encourage the development of next generation digital initiatives and innovative solutions to support our focus on enhancing the clients’ experience and strengthening our governance and control.
Looking ahead, the Group will continue to tap new business opportunities keeping in view UAE’s economic recovery has begun to gain momentum, underpinned by its early and strong response to the COVID-19 pandemic, continued supportive macroeconomic policies, successful vaccination drive, significant non-oil activity, increased tourism, revival of production and trade world-wide and activity related to Expo 2020.”
