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National Bank of Fujairah posts a strong 39.3% net profit before tax growth to Dh715 million in the first nine months of 2024

Net profit after tax of Dh650.4 million generated through healthy balance sheet growth of 13.2%

National Bank of Fujairah (NBF) on Tuesday announced a year-on-year growth of 39.3 per cent to close the nine-month period at a net profit before tax of Dh715 million compared to Dh513.2 million in the corresponding period of 2023.

NBF posted a net profit after tax of Dh650.4 million for the nine-month period with a corporate tax charge of Dh64.6 million.

On the back of a strong Q3 2024 performance, NBF posted a net profit before tax of Dh230.1 million in the third quarter of 2024, a rise of 27.1 per cent over the corresponding quarter of 2023. “These results demonstrate the bank’s continued momentum on selective quality business growth and the ability to initially maintain margins in a falling interest rate environment. Buoyant market conditions supported by UAE government initiatives, improvement in impairment provisions, and careful management of costs, in what continues to be an uncertain global environment exacerbated by geopolitical tensions, all contributed to this robust position,” NBF said in a statement.

Underpinned by the higher revenue generation, NBF posted an operating profit of Dh1.3 billion for the nine-month period, a rise of 7.6 per cent compared to Dh1.2 billion in the corresponding period of 2023; and up 7.5 per cent for the three-month period ended 30 September 2024 over the corresponding period of 2023.

Operating income reached Dh1.8 billion, up 8.4 per cent compared to Dh1.7 billion in the corresponding period of 2023; and up 8.9 per cent for the three-month period ended 30 September 2024 over the corresponding period of 2023 reflecting the focus on key business segment growth and proactive asset and liability management.

Net interest income and net income from Islamic financing and investment activities grew 5.6 per cent to Dh1.33 billion for the nine-month period ended 30 September 2024 compared to Dh1.26 billion in the corresponding period of 2023. It was up 3.0 per cent for the three-month period ended 30 September 2024 compared to the corresponding period of 2023.

Net fees, commission and other income rose 15.4 per cent to Dh358.1 million for the nine-month period ended September 30, 2024 compared to Dh310.4 million in the corresponding period of 2023. It was up 29.0 per cent for the three-month period ended 30 September 2024 compared to the corresponding period of 2023.

Foreign exchange and derivatives income experienced a good growth of 16.6 per cent compared to the corresponding period of 2023, reaching Dh139.1 million for the nine-month period ended 30 September 2024. It was up 21.8 per cent for the three-month period ended 30 September 2024 compared to the corresponding period of 2023.

Income from investments and Islamic instruments marked a significant bounce back. In addition, the fair value gain on fair value through profit or loss (FVTPL) and fair value through other comprehensive income (FVOCI) investment portfolio also improved by Dh74.3 million during the nine-month period ended 30 September 2024.

Operating expenses increased by 10.3 per cent, reflecting NBF’s investments in its businesses, systems, infrastructure and people. These investments include a set of digitalization initiatives to further enhance our focus on exceptional customer service, innovation and competitiveness in line with the changing market demands. Further, NBF’s cost-to-income ratio stood at 30.5 per cent compared to 30.0 per cent in the corresponding period of 2023, remaining in the mid-industry range and reflecting on-going cost discipline.

NBF maintained its policy of prudent and transparent recognition of problem accounts whilst taking into consideration the new credit risk standards being introduced by the Central Bank of the UAE. NBF booked net impairment provisions of Dh555.7 million for the nine-month period ended 30 September 2024 compared to Dh667.6 million in the corresponding period of 2023, a reduction of 16.8 per cent. The total provision coverage ratio stood at 114.6 per cent compared to 120.2 per cent as at 31 December 2023. The NPL ratio stood at 5.3 per cent compared to 4.9 per cent as at 31 December 2023. From an overall improvement of asset quality perspective, the combined IFRS 9 stage 2 and 3 mix reduced to 11.4 per cent compared to 12.2 per cent as at 31 December 2023.

Total assets rose by 13.2 per cent to reach Dh58.5 billion compared to Dh51.7 billion at 2023 year-end, up by 17.1 per cent from 30 September 2023.

Loans and advances and Islamic financing receivables rose by 10.5 per cent to reach Dh30.8 billion compared to Dh27.9 billion at 2023 year-end, up by 11.2 per cent from 30 September 2023.

Investments and Islamic instruments increased by 13.9 per cent to reach Dh9.3 billion compared to Dh8.1 billion at 2023 year-end, up by 25.1 per cent from 30 September 2023; optimizing a portion of liquidity towards a high-quality investment book to augment value and return.

Customer deposits and Islamic customer deposits increased by 8.5 per cent to reach Dh41.8 billion compared to Dh38.6 billion at 2023 year-end, up by 12.4 per cent from 30 September 2023. Current and Saving Accounts (CASA) deposits stood at 40 per cent of total customer deposits, balancing the impact of fixed-term deposit products.

Ample liquidity has been maintained with lending to stable resources ratio (LSRR) at 67.3 per cent (2023: 67.4 per cent) and eligible liquid assets ratio (ELAR) at 30.3 per cent (2023: 28.3 per cent), well ahead of Central Bank of the UAE’s minimum requirements.

The capital adequacy ratio (CAR) stood at 21.3 per cent (Tier 1 ratio of 20.1 per cent and CET 1 ratio of 14.3 per cent) compared to 19.0 per cent (Tier 1 ratio of 17.8 per cent and CET 1 ratio of 14.2 per cent) at 2023 year-end; exceeding regulatory requirements and ensuring a robust financial foundation. This is primarily on account of the successful issuance of the Additional Tier 1 capital securities (“AT1 capital”), amounting to US$ 275 million (Dh1.01 billion) dated 16 September 2024, as part of strengthening NBF’s capital structure supporting its business and operational strategy and refinancing of the existing AT1 capital securities of US$ 350 million (Dh1.286 billion). The US$ 350 million AT1 capital was called on 16 September 2024 and settled on the first call date i.e. 01 October 2024 post the quarter-end. Had this settlement been undertaken within September 2024, the total capital adequacy ratio would have still been strong at 18.0 per cent. The new issuance has been privately placed with the Government of Fujairah. The capital instruments allow for the mandatory conversion into ordinary shares, at a ratio of Dh2.85:1, within two years of this issuance.

Return on average assets was 1.57 per cent, up from 1.40 per cent for the corresponding period in 2023. Had the afore-mentioned AT1 capital settlement been undertaken within September 2024, the return on average assets would augment to 1.59 per cent.

Return on average equity was 11.87 per cent, up from 11.24 per cent for the corresponding period in 2023. Had the afore-mentioned AT1 capital settlement been undertaken within September 2024, the return on average equity would surge to 13.01 per cent.

NBF’s rating was re-affirmed at A- by Capital Intelligence, with a stable outlook, highlighting the bank’s underlying strength, prudent risk management and resilience.

Dr. Raja Easa Al Gurg, Deputy Chairperson said: “NBF’s impressive set of results underscore its relentless execution of strategic objectives, the resilience in its core business and its ability to perform across key business segments in what continues to be an uncertain global environment, exacerbated by geopolitical tensions and a falling interest rate environment. With the benefit of the buoyant local market momentum spurred by solid domestic activity in the tourism, trade, construction and financial services sectors, the robust capital position and improving overall asset quality, we will continue building on our steadfast dedication to service excellence, driving digital adoption and enhancing shareholder value, placing us well for sustained progress and agility throughout the rest of 2024 and beyond.”