National Bank of Abu Dhabi, the UAE's largest lender by market value, on Tuesday reported a 10 per cent decline in quarterly profit due to higher provisions, missing forecasts.
NBAD said net profit was Dh927 million ($252.4 million) in the first quarter ended March 31 compared to Dh1.03 billion in the prior-year period.
Analysts had forecast average profit of Dh954.20 million in a Reuters poll.
The bank booked net impairment charges of Dh365 million in the first quarter, up 62.2 per cent from the same quarter last year.
Non-performing loans increased to Dh3.77 billion, representing 2.56 per cent of the bank's loan book.
"Although net profits for the current quarter are below the first quarter of 2010 as a result of higher provisions, top line revenues, operating profits, assets, loans and deposits are all at record levels," NBAD Chief Executive Michael Tomalin said in a statement.
Operating income for the quarter was Dh1.88 billion, up 6.2 per cent compared with the same period last year.
Loans and advances grew to Dh143.2 billion at the end of the first quarter, up 4.7 per cent from the fourth quarter.
In February, Tomalin told Reuters that 2011 would be a tricky year for UAE banks.
Nasser Alsowaidi, Chairman of NBAD said, “Economic recovery in the UAE and in Abu Dhabi continues, amidst global recovery, driven by the various initiatives undertaken by the government and government-related institutions in the UAE. Despite NBAD’s good performance, we remain cautious to the challenges posed by the regional and global environment. Longer term prospects for the bank remain clear and bright as we continue to implement our strategies aligned with the growth of Abu Dhabi and UAE.”
Net interest income and net income from Islamic financing contracts for the quarter rose 11.2 per cent to Dh1.38b compared with first quarter of 2010 while non-interest income was lower by 5.6 per cent to Dh503m.
Net interest margin was 2.48 per cent for Q1 2011, almost matching the levels recorded in Q1 2010 albeit lower as compared to 2.57 per cent for the full year 2010.
Operating expenses for the quarter were Dh566m, higher by 14.6 per cent compared with the corresponding period, but lower by 10.4 per cent compared to the last quarter of 2010. The cost to income ratio was 30.1 per cent for the first quarter of 2011. The ratio remains below the Group’s medium-term cap of 35 per cent.
During the quarter, NBAD expanded its domestic presence to 113 branches and cash offices and 421 ATMs. NBAD launched three Business Banking Centers in UAE in its ongoing effort to expand its services to small- and medium-sized enterprises (SMEs).
Total Assets reached Dh233.5b as at March 31, 2011, 10.4 per cent up on 31 December 2010 and 16.3 per cent up on 31 March 2010 mainly driven by the growth in deposits.
Loans and advances to customer increased to Dh143.2 billion, up 4.7 per cent on 31 December 2010 and 7.2 per cent on 31 March 2010.
Customer deposits at Dh141.1 billion jumped 14.6 per cent compared to the year end and by 23 per cent compared to 31 March 2010.
Capital resources stood at Dh32.4 billion after dividend payments of Dh120 million on Government of Abu Dhabi (GoAD) Tier-I capital notes and Dh718 million to shareholders as a cash dividend for 2010. Capital resources consist of shareholders’ funds of Dh20.1 billion, GoAD Tier-I capital notes of Dh4 billion and subordinated convertible notes of Dh8.3 billion. Our capital adequacy ratios remain well above the minimum required by the UAE Central Bank and Basle-3.