Finance House has reported a consolidated net profit of Dh83.7 million for 2013, which is 15.9 per cent higher than the net profit of Dh72.2 million achieved in the previous year.
Total comprehensive income for the year grew by a whopping 52.3 per cent to reach Dh117.6 million compared to Dh77.2 million in the previous year. Total assets grew to Dh4.12 billion as at 31 December 2013, registering a healthy increase of 10.6 per cent compared to Dh3.72 billion as at 31 December 2012.
The board of directors has recommended a cash dividend of 25 per cent.
Commenting on 2013 results, Mohammed Alqubaisi, Chairman of Finance House, said: “We are proud to maintain our profitable stance for the ninth successive year since inception. In less than a decade, we have experienced a complete boom-bust cycle and it is gratifying to note that our resilient business model has delivered profitable growth not only during periods of rapid economic growth but also during periods of relative economic stagnation or contraction. For a genuine private sector enterprise operating in the fiercely competitive UAE financial services sector, this is a creditable achievement indeed.”
During the year, customer deposits grew by a robust 20.8 per cent to reach Dh2.18 billion compared to Dh1.80 billion as at the end of the previous year. This level of Customer Deposits is an all-time high and bears testimony to the confidence that the market places in Finance House.
Due to unavoidable margin compression in a low interest rate environment, net interest income and income from Islamic financing & investing assets was flat at Dh128.4 million in 2013 compared to Dh128.7 million in 2012. However, net fee and commission income jumped by 50.3 per cent to Dh43.5 million in 2013, compared to Dh28.9 million in 2012. Aggregate investment income from the well-diversified proprietary investment portfolio consisting of listed equity, private equity, fixed income and investment properties was up by 11.2 per cent to Dh94.7 million in 2013 compared to Dh85.1 million in the previous year.
As a combined result of the above, total operating income for 2013 was up by 9.4 per cent at Dh266.4 million compared to Dh243.4 million in the previous year.
Net loans & advances including Islamic financing & investing assets as at 31 December 2013 grew by 8.4 per cent to Dh1.58 billion compared to Dh1.46 billion at the end of the previous year. Loans to Deposits ratio as of 31 December 2013 stood at a healthy 72.5 per cent compared to 80.8 per cent in the previous year, reflecting a cautious approach to loan book growth as well as the significant head room available for sustained loan book growth in 2014 and beyond.
FH’s Non Performing Loan provisioning policy continues to be conservative and as of 31 December 2013, the Company maintains healthy loan loss coverage of 94 per cent (2012: 81 per cent) by way of specific provisions to cover net exposure against individually impaired loans as well as loan balances that are past due for 91 days or more but are not impaired. In addition, FH also maintains a collective provision of 1.25 per cent of the Performing Portfolio.
Total operating expenses were higher by 6.7 per cent in 2013 compared to 2012 mainly on account of hiring new employees and higher establishment costs, in line with increased business volumes across all business segments. Despite higher operating expenses, the Cost/Income ratio improved by 1.4 per cent in 2013 compared to 2012.
FH continues to manage its liquidity in a prudent manner. Since the onset of the financial crisis in October 2008, FH has remained a net lender to the UAE inter-bank market and continues to maintain this position till date. Cash and cash equivalents as at 31 December 2013 swelled to Dh817 million compared to Dh599 million as at the end of the previous year, representing a healthy 19.8 per cent of Total Assets.
Shareholders’ Equity as at 31 December 2013 improved to Dh729 million registering a robust year on year increase of nearly 12 per cent. Capital adequacy ratio computed in accordance with Basel II guidelines stood at a robust 24.6 per cent, providing a solid footing for accelerated future growth in assets.
“We look forward to 2014 with renewed optimism for sustained profitable growth, in line with improving economic conditions. Our strategy is sound and we have the necessary mechanisms and structures in place to exploit profitable opportunities, to adapt quickly to changing market conditions, to continue managing risks well and to maximize returns for our shareholders,” concluded Alqubaisi.