Commercial Bank of Dubai’s (CBD) net profit for year ending December 31, 2013, increased by 18 per cent to Dh1.01 billion compared to Dh857 million for the previous year, the bank reported today.
With this, the bank maintains its record of annual growth in its net profit over the last 5 years right through the economic downturn.
The record net profits were achieved on the back of a 9.4 per cent growth in operating income, which reached an all-time high of Dh2.03bn. CBD’s net interest income increased by 8.7 per cent to Dh1.45bn in 2013 from Dh1.33bn in 2012, while non-interest income increased by 11.1 per cent from Dh525.7mn in 2012 to Dh584.2mn for the year ended December 31, 2013.
Operating expenses increased by 9.7 per cent from Dh572.2mn for 2012 to Dh627.6mn for 2013 as the Bank made substantial investments in its resources and infrastructure. As a result operating profit increased by 9.3 per cent from Dh1.286bn to Dh1.405bn for 2013.
Commenting on the performance, Peter Baltussen, CBD’s CEO, said: “Our 2013 record net profit was a result of a strong performance across all our business lines. Our personal banking strategy with renewed focus on the affluent segment has enabled us to diversify our bottom line and increase our market share. At the same time we continue to stay close to our corporate and commercial clients particularly the family owned businesses to ensure that we are their preferred banking partner in the coming years. I believe CBD with its comfortable liquidity and robust capital adequacy is in a strong position to grow along with its clients.”
He added: “2014 will see the bank further consolidate its personal banking strategy with the launch of an innovative, virtual and personalised banking offering which will provide our customers with a unique experience.”
The results which are subject to the UAE Central Bank’s approval have been announced following a meeting of the Bank’s Board of Directors held on Wednesday, January 29, 2014. The Board has proposed a cash dividend of 30 per cent and bonus shares of 10 per cent, subject to the agreement of the shareholders at the Annual General Assembly Meeting to be held on March 5, 2014.
The bank’s efficiency ratio increased slightly from 30.8 per cent for 2012 to 30.9 per cent for 2013, lower than local industry average. Total assets as at December 31, 2013, stood at Dh44.5bn, a 13.2 per cent increase over the Dh39.3bn as at December 31, 2012.
Loans and advances increased by 11.3 per cent from Dh27.2bn as at December 31, 2012, to Dh30.3bn as at December 31, 2013. The bank continued to grow its corporate banking business where gross lending increased by 9.7 per cent from Dh26.9bn in 2012 to Dh29.5bn in 2013.
CBD’s increased focus on its Personal Banking offering resulted in a 35 per cent increase in gross personal loans from Dh2.4bn as at December 31, 2012, to Dh3.3bn as at December 31, 2013.
Customers’ deposits as at December 31, 2013, stood at Dh30.9bn, up by 10.3 per cent over the Dh28.1bn as at end of 2012.
CBD’s liquidity position was comfortable with its advances to stable resources ratio at 80.9 per cent as at December 31, 2013, against 81.8 per cent as at December 31, 2012, compared to the regulatory maximum ratio of 100 per cent.
The liquidity coverage ratio as calculated per Basle-III guidelines was 116 per cent as at December 31, 2013, whilst the minimum stipulated ratio is 50 per cent. During the year, the bank repaid Dh1.8 billion of its deposits received from the UAE Ministry of Finance ahead of its contractual maturity on December 31, 2016.
Subsequently the bank successfully issued $500mn of conventional bonds as part of its Euro Medium Term Note programme. The bank also prepaid its $450mn club deal in October 2013 with a remaining maturity of 1 year and replaced it with a club deal of similar amount in December 2013 with a 3 year maturity.
The bank is strongly capitalised with total capital resources of Dh7.2bn as at December 31, 2013. The bank’s capital adequacy ratio as per Basel II was robust at 19 per cent as at December 31, 2013, against regulatory requirement of 12 per cent, while Tier 1 ratio was at 17.7 per cent as at December 31, 2013 (Dec 12: 17.72 per cent).
CBD’s Leverage ratio calculated as per Basel-III guidelines was 13.3 per cent as at December 31, 2013, compared with the minimum stipulated 3 per cent ratio. Return on average assets for the year ended December 31, 2013, improved to 2.4 per cent from 2.2 per cent for the year ended 2012, which is substantially higher than its peer group average. Return on average equity increased to 15.1 per cent in 2013 compared to 13.4 per cent in 2012.
The full year impairment charge for loan portfolio was Dh419mn, including Dh33mn for general provisions, which represents 1.5 per cent of the bank’s credit risk weighted assets (CRWA) by end of 2013. The non-performing loan (NPL) ratio improved from 11.2 per cent as at end of December 2012 to 10.1 per cent as at end of December 2013 and the NPL coverage ratio improved to 84.9 per cent (2012: 71.7 per cent).