CBD profit rises 17% to Dh496.8m in H1 2014

Commercial Bank of Dubai (CBD) net profit for the first six months of 2014 increased 17 per cent from Dh496.8 million for the first half of 2013 to Dh581.1 million for the same period of the current year.

The bank said in a statement to the Dubai bourse that its operating profit increased 4.3 per cent from Dh688 million to Dh718 million, mainly due to a 6.8 per cent increase in net interest income to Dh741.2 million (H1-13 – Dh694.1 million) and a 7.5 per cent increase in non-interest income to Dh311.2 million (H1-13 – Dh289.4 million).

Operating expenses also surged 13.4 per cent from Dh295.1 million in H1 2013 to Dh334.6 million in H1 2014 mainly on the back of the bank’s increased focus on personal banking and investments in digital banking. Cost to income ratio was at 31.8 per cent.

Loans and advances stood at Dh31.3 billion as of 30 June 2014, registering an increase of 6.8 per cent over the Dh29.3 billion as at 30 June 2013 and were 3.4 per cent higher when compared to Dh30.3 billion as at 31 December 2013.

Personal banking gross loans were at Dh3.8 billion, a 40 per cent increase when compared to the Dh2.7 billion as at 30 June 2013 and were 15.9 per cent higher when compared to the Dh3.3 billion as at end of Dec-13.

Customers’ deposits totalled Dh32.3 billion as of 30 June 2014, an increase of 12.1 per cent compared to Dh28.8 billion as of 30 June 2013, and 4.3 per cent higher when compared to Dh30.9 billion at the end of 2013.

The bank said its liquidity continued to be comfortable with advance to stable resources ratio of 81 per cent as of 30th June 2014 (80.9 per cent in December 2013), 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 102.8 per cent (116 per cent in December 2013), compared to the minimum stipulated ratio is 50 per cent. Uses to stable resources ratio was 85.8 per cent against a regulatory requirement of less than 100 per cent (Dec-13 – 86.9 per cent).

CBD’s capital adequacy and tier 1 capital ratios were at 20 per cent and 18.6 per cent respectively 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 13.2 per cent against regulatory requirements of 3 per cent minimum (Dec-13-13.3 per cent). Return on average assets for the first half of 2014 improved to 2.6 per cent from 2.4 per cent for the same period last year. Return on average equity increased to 16.8 per cent for the first six months of 2014 when compared to 15.5 per cent for the first half of 2013.

While there has been an improvement in overall asset quality, the Bank continues its prudent approach to provisioning and booked an amount of Dh136 million in the first half of 2014 as impairment charges net of recoveries (H1-2013, Dh192 million). The provision charge improved CBD’s impaired loan coverage ratio from 84.9 per cent as at end of Dec-2013 to 89 per cent at the end of the reported period.

Peter Baltussen, Chief Executive Officer of CBD, said: “First half 2014 performance reflects the strength and depth of the bank’s franchise. The business strategy set in place last year under the guidance of our Board of Directors is starting to yield returns and we continue to focus our energies towards enhancing our core business strengths.”

“CBD’s first half 2014 net profit of Dh581.1 million is the highest first half yearly profit ever achieved by the Bank. We believe that the economic climate in the UAE will enable the Bank to sustain the momentum seen in the first two quarters of 2014.

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