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Commercial Bank of Dubai nine-month net profit rises on strong loan growth

Lender’s net interest income grows on high interest rates

Commercial Bank of Dubai (CBD) on Wednesday reported a net profit after tax result of Dh2.231 billion for the first nine months of 2024, up 26.5 per cent on a pre-tax basis (up 15.2 per cent on a post-tax basis) compared to the corresponding period in 2023.

Strong growth in loans during the first nine months of 2024 resulted in a solid net interest outcome, which was supported by non-funded income and lower cost of risk that more than offset higher expenses and the corporate tax charge. High global market interest rates during the first nine months of 2024 contributed to the solid net interest income outcome. UAE business activity bolstered by economic incentives, population growth and business confidence remained constructive and is forecast to remain positive looking ahead. The public sector strategic positioning, strategic investments, economic diversification and broad-based growth, especially in non-oil sectors is expected to underpin continued business performance.

Operating income for the first nine months of 2024 was Dh4,164 million, up 12.1 per cent, attributable to an increase in net interest income (NII) by 7.3 per cent on strong loan growth during the first nine months of 2024 and high market interest rates with Other Operating Income (OOI) up 23.8 per cent.

Operating expenses were Dh1.018 billion, with the increase primarily driven by inflation, investments in digitisation, technology, business growth, governance and regulatory compliance. The cost-to-income ratio remains strong at 24.44 per cent.

Total assets were Dh140.2 billion as at 30 September 2024, an increase of 8.7 per cent compared to Dh129.0 billion as at 31 December 2023. Net loans and advances were Dh91.7 billion, registering an increase of 10.1 per cent compared to Dh83.3 billion as at 31 December 2023.

Customers’ deposits were Dh98.7 billion as at 30 September 2024, representing an increase of 11.8 per cent compared to Dh88.3 billion as at 31 December 2023. Low-cost current and savings accounts (Casa) constituted 49 per cent of the total customer deposit base, while the loan-to-deposit ratio stood at 93 per cent.

The non-performing loan (NPL) ratio decreased markedly to 4.96 per cent, down from 6.46 per cent at the end of 2023. The net impairment charge totalled Dh697 million for the first nine months of 2024. The coverage ratio increased by 1,335 bps to 96.61 per cent (December 2023: 83.26 per cent) and was 133.09 per cent inclusive of collateral for stage 3 loans. As at September 30, 2024, total allowances for impairment (covering loans and advances and unfunded exposures) amounted to Dh5,702 million.

The bank’s liquidity position remained robust with the advances to stable resources ratio at 86.00 per cent as at 30 September 2024 (December 2023: 87.25 per cent), compared to the UAE Central Bank maximum of 100 per cent.

CBD’s capital ratios were strong with the capital adequacy ratio (CAR) at 16.56 per cent, Tier 1 ratio at 15.42 per cent and Common Equity Tier 1 (CET1) ratio at 13.37 per cent. All capital ratios were well above the minimum regulatory thresholds mandated by the UAE Central Bank.

Dr Bernd van Linder, Chief Executive Officer, said, “CBD has delivered an excellent result attributable to strong loan growth with higher revenues at outstanding returns and with significantly improved asset quality. In Q3 2024, CBD launched dedicated accounts for virtual asset service providers (VASPs). The introduction of banking services for VASPs aligns with our strategic vision to support the digital economy and foster a robust regulatory environment that promotes growth and stability. The bank remains focused on the disciplined execution of its strategy and is well placed to continue to achieve our strategic objectives and high-quality performance for the periods ahead.”