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National Bank of Abu Dhabi confident for 2016

Abu Dhabi - Q4 profit falls 25% due to market conditions, SMEs credit.

National Bank of Abu Dhabi (NBAD) remains "confident and conservative" in 2016, after encountering challenging times in the previous year.
The nation's second biggest lender saw net profits dropped 25 per cent to Dh1.036 billion at the end of the fourth quarter; the earnings for the year slid six per cent to Dh5.232 billion. However, revenues dropped 7.2 per cent in the quarter ended December 31 they rose one per cent to Dh10.6 billion in 2014.
In 2016, the group chief executive Alex Thursby said he will continue to execute long-term growth strategy focusing on the UAE business and target growth markets domestically and internationally.
"NBAD is in a competitive position with strong liquidity from its international network, a high-quality loan book and limited exposure to vulnerable sectors," he said.
"As always, we will maintain our rigorous approach to risk management and cost control as we invest in core operations of the business as well as key talent. We remain confident and conservative in 2016," Thursby said.
The chief executive expected NPLs to remain below three per cent level in 2016, while the cost of risk to go up to 55 basis points. The board proposed cash dividend of 40 per cent or 40 fils per share.
In a regulatory filing to Abu Dhabi Securities Exchange the lender said customer accounts and other deposits decreased four per cent year-on-year to Dh234 billion as the decline in government deposits, particularly in the first half of the year. Customer Loans up six per cent year-on-year to Dh205.9 billion and assets rose 8.1 per cent.
Net interest income including income from Islamic financing was slightly up by 0.5 per cent to Dh1.844 billion in the last quarter and down three per cent year-on-year. For the year, net interest income was up four per cent year-on-year to Dh7.307 billion. Net interest income and margin both increased reflecting changes in the composition of NBAD's lending portfolios toward higher yielding assets.
"This was driven mainly from our Retail and Commercial banking business with new lending to customers transacted at higher yields," the lender said in a statement.
Net fees and commissions for the quarter were up down 13 per cent year-on-year to Dh537 million. However, it grew quarter on quarter by nine per cent.
Forex and investment income dropped 38 per cent to Dh168 million in the fourth quarter as a result of unfavourable market conditions. However, it grew 12 per cent to Dh1.1 billion, in the year reflecting strong growth in the bank's customer sales franchise as well as opportunistic gains on the sale of investment securities in the first half.
Net impairment charges rose 8.6 per cent year-on-year to Dh943 million. These charges in the last quarter were Dh436 million higher when compared year-on-year, due to a combination of "challenging operating environment, concerns over SME credit quality and prudent provisioning."
Restructured loans increased by Dh1.371 billion to Dh2.673 billion as of December 2015, primarily on account of one large successful restructuring, which is backed by strong collateral and expected cash flows.
Non-performing loans decreased by a net Dh328 million in the year to Dh5.833 billion, the second biggest lender said.
Total provisions were Dh6.1 billion and represented 105 per cent of non-performing loans. The reduction in total provisions when compared to year-end 2014 was due to recoveries, write-backs and the bank's decision to write-off certain legacy NPLs.
- haseeb@khaleejtimes.com