NBF core operating income up 33.4pc
Fujairah, April 23, 2009
National Bank of Fujairah (NBF) has achieved a core operating income growth of 33.4 per cent following continued focus on core businesses, it was revealed at a shareholders meeting.
NBF held its annual ordinary and extra ordinary general meetings today (April 23) at Al Diar Siji Hotel in Fujairah.
The shareholders considered and approved the chairman’s report on the bank’s activities and its consolidated financial statements for the year ended December 31, 2008.
Financial stability was underpinned by strengthening of the capital adequacy (Basel 1) ratio at 17.8 per cent and the advances to deposits ratio at 86.4 per cent.
Whilst the Bank saw consistent income growth in 2008 across all its core businesses, global market conditions had a significant impact on the value of the Bank’s investment portfolio.
The investment portfolio fair value decreased by Dh250 million ($68 million), of which Dh227 million was recognised in the profit and loss [2007: Dh70.3 million gain] and the remainder in equity.
In response to continued uncertainty over macro economic conditions in the coming year, the bank has significantly reduced its exposure to market volatility. Current market conditions also necessitate a prudent approach to potential loan loss provision.
Provision policy for specific provisions was brought forward to 90 days past due, and a collective impairment provision of Dh45 million was secured in deteriorative credit conditions.
The bank recorded a loss of Dh50.3 million [2007: Dh323.8 million profit] as a result of investment fair value losses and prudent loan loss provisioning for the coming year, hence no distribution to shareholders was announced.
The bank recently announced a profit of Dh30 million for the first quarter of 2009 compared to the profit for the first quarter of 2008 of Dh55 million. The decline in profit reflects deteriorated credit and strained liquidity conditions and slow down in economic activity.
The loan loss charge for the quarter is Dh24 million as opposed to net recovery of Dh0.6 million in the first quarter of 2008. The liquidity cost in the market has been higher than ever and has impacted net interest income and profit, despite the bank’s prudent liquidity management.
“We are pleased to see the Bank’s profitable results for Q1 2009,” said Sheikh Saleh Bin Mohammed, chairman of NBF.
“The board was confident that, despite the difficulties faced in 2008, continued focus on core operations, risk management and financial stability would ensure that the bank is well positioned to grow in 2009. This a solid set of results in one of the most challenging economic environments we have ever seen. Following the full year of loss, Q1 results mark a welcomed return to profitable operations of the bank.”
A continued emphasis on effective asset and liability management strengthened the bank’s liquidity and capital position.
The bank secured an increase in available funding, with a new syndicated loan facility of $ 210 million equivalent, being a $ 80 million increase on the previous facility, and a subordinated debt issuance of Dh400 million.
The conversion of the Ministry of Finance’s funding into subordinated debt will further strengthen the bank’s capital and liquidity position. These prudent measures, together with a continued focus on core businesses and enhanced risk management, ensure that the bank is financially strong and well placed to achieve continued and stable growth for the year.
Sir Easa Saleh Al Gurg, deputy chairman said: “The conversion of the Ministry of Finance funding into a subordinated debt will further supplement the Bank’s core business by improving the asset and liability matching profile and the capital adequacy ratio.
“The bank will continue its prudent approach in the unprecedented market conditions and will pursue selective opportunities for achievin