A rise in net interest income and proceeds from its Islamic financing business helped Abu Dhabi's First Gulf Bank (FGB) to post a modest rise in quarterly profit on Wednesday.
Quarterly profit at Abu Dhabi's First Gulf Bank increased one per cent, the lender said in a statement, easily beating analysts forecasts.
FGB, the second-largest bank by market value in the UAE, made a profit of Dh865 million ($235.6 million) in the three months to Dec. 31, compared with Dh855 million in the same period last year.
Analysts polled by Reuters had estimated, an average, fourth quarter profit of Dh590 million.
The bank reported a record full year profit of Dh3.42 billion.
FGB's non-performing loans (NPL), or bad loans, to gross loans ratio stood at 3.7 per cent at the end of 2010, compared with 3.3 per cent at the end of the previous year, the statement said, with a coverage ratio of 89.4 per cent.
"Provisions are significantly lower than expected, down quarter on quarter," said Sofia al Boury, assistant vice-president for research at Shuaa Capital.
The NPL ratio would rise to 4.6 per cent of the bank's loan portfolio if exposure to Dubai World was included in the 2010 balance sheet, it said.
"As we are now applying the 90 days overdue rule, we are content with the provision coverage level, as these ratios do not take into consideration the substantial security and collateral, which the bank is holding against its loan portfolio," said Andre Sayegh, chief executive, in the statement.
Net interest income and Islamic financing income grew 11 per cent in 2010, and 9 per cent in the fourth quarter from the prior-year period.
Loans and advances increased 6 per cent and customer deposits grew 14 per cent over the year, boosting the bank's liquidity.
The bank expects to continue to focus on its core operations and remain conservative in its expansion plans.
"Growth in profitability combined with strong balance sheet position and ratios remain the core of First Gulf Bank's financial model. Our policy favours a prudent and gradual overseas expansion," Sayegh said.
In January this year FGB sold five-year bonds worth 200 million Swiss francs with a coupon of 3 percent after holding off on a benchmark $500 million bond citing volatile market conditions, at the end of 2010.