CBD Q3 profit surges 21.2%

Commercial Bank of Dubai’s (CBD) net profit for the first nine months of 2014 increased by 18.4 per cent to Dh890.1 million from Dh751.5m for the first nine months of 2013.

Operating profit increased by 8.7 per cent from Dh1.02 billion to Dh1.1b, mainly due to a 10.5 per cent increase in net interest income to Dh1,155.6m (9M-13 – Dh1,045.4m) and a 10.5 per cent increase in non-interest income to Dh467.8m (9M-13 – Dh423.3m).

Operating expenses increased by 14.6 per cent from Dh456.9m for the nine months period ended September 2013 to Dh523.7m for the same period this year as the bank sustained its investments towards its strategic initiatives, including enhanced focus on personal banking as the bank redesigned its distribution network and committed increased resources to its new digital banking platform.

This resulted in increasing the share of personal banking loan portfolio the total bank loan portfolio from 9.4 per cent in September 2013 to 13.2 per cent at the end of the current period. Cost to income ratio stood at 32.3 per cent.

Loans and advances of Dh31.5b as at 30 September 2014 registered an increase of 3.5 per cent over the Dh30.4 billion as at 30 September 2013 and were 4 per cent higher when compared to Dh30.3b as at 31 December 2013.

Personal banking gross loans were at Dh4.2b, a 40 per cent increase when compared to the Dh3b as at 30 September 2013 and were 27 per cent higher when compared to the Dh3.3b as at end of December 2013.

Customers’ deposits of Dh31.8b as at 30 September 2014, increased by 10.6 per cent compared to Dh28.7b as at 30 September 2013, and were 2.7 per cent higher when compared to Dh30.9b as at last year end.

The bank’s liquidity continued to be comfortable with advance to stable resources ratio of 81.7 per cent as at 30 September 2014 (Dec-13: 80.9 per cent), while the UAE Central Bank has set 100 per cent as the maximum limit. Liquidity coverage ratio calculated as per Basel III guidelines was at 135.6 per cent (Dec-13: 116 per cent), compared to the minimum stipulated ratio of 50 per cent.

CBD’s capital adequacy and tier 1 capital ratios were at 20 and 18.6 per cent, respectively, one of the highest in the UAE banking system and were significantly above the regulatory thresholds of 12 per cent and 8 per cent mandated by the UAE Central Bank.

Leverage Ratio as per Basel III guidelines was 13.1 per cent against regulatory requirements of 3 per cent minimum (Dec-13: 13.3 per cent). Return on average assets for the nine months ended September 2014 improved to 2.6 per cent from 2.5% for the same period last year. Return on average equity increased to 16.8 per cent for the first nine months of 2014 when compared to 15.3 per cent for the same period last year.

Impairment provisions net of recoveries fell from Dh260m booked in the nine month period ended 30 September 2013 to Dh210m for the current year as overall asset quality metrics continued to strengthen. In spite of the drop in impairment provisions, CBD’s impaired loan coverage ratio improved from 84.9 per cent as at end of Dec-2013 to 92.6 per cent at the end of the reported period.

Commenting on the Bank’s performance, Peter Baltussen, Chief Executive Officer said: “This is the seventh consecutive quarter in which the Bank’s net profit has grown over the previous quarter. The improving macro-economic indicators in the UAE have resulted in a growing loan book, strong liquidity and capital adequacy metrics and improving asset quality ratios.”

“With an increasing contribution from personal banking to the Bank's bottom line backed by stable returns from the corporate and commercial segments, the Bank is projected to book robust net profit in 2014 and beyond.”

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