CBD operating profit up 22% to Dh1.19bn
Commercial Bank of Dubai (CBD) yesterday said operating profit increased 22 per cent to Dh1.19 billion for the year ended on December 31, 2008, compared to Dh977m for the previous year.
The bank's net profit for 2008 financial year dropped 17.5 per cent to Dh771 million from Dh936m a year earlier as global financial crisis took a toll on the bank's investment in the fourth quarter.
CBD Chief Executive Peter Baltussen said: "We are pleased that the results from our core operations have continued to grow across all lines of business, in spite of a slow down of the economy in the second half of 2008. In line with our conservative approach, the bank has taken a provision on its local and regional equity portfolio to reflect the decrease of the respective share prices. However, it should be noted the underlying listed companies continue to show strong profits and are not impaired."
CBD said the impact of the global financial crisis has negatively affected the market value of some of the bank's strategic equity investments in locally and regionally listed companies during the last quarter of 2008. The bank didn't provide figures for the fourth quarter.
Although the respective companies are not impaired, as a measure of prudence and in line with IFRS, the bank booked Dh397m provision to reflect the decrease in market values. The bank's board also proposed 25 per cent bonus shares and 15 per cent cash dividend, subjected to the approval at the Annual General Meeting to be held on March 18.
The bank's assets reached Dh36 billion at the end of 2008, up 17 per cent from 2007. Customer deposits increased by 22 per cent to Dh26bn and loans and advances showed a growth of 38 per cent up to Dh28.5bn. Lending to companies represents more than 89 per cent of the bank's loan portfolio.
Net interest income in 2008 increased by 31 per cent, fees and commissions increased by 27 per cent and foreign exchange income increased by 109 per cent over the previous year.
As a result of a strong increase of operating income and effective expense management, the bank's cost to income ratio improved to 29 per cent in 2008.
The bank's capital adequacy ratio remains strong at 13 per cent, well above the minimum required by the Central Bank. The quality of the credit portfolio improved further in 2008, with non-performing loans at Dh241m by end-2008, representing 0.83 per cent of total loans. The provision coverage ratio for non-performing loans has reached 96 per cent, after further provisions of Dh83m were added in view of the uncertain economic environment in 2009.
Baltussen said: "The quality of our loan portfolio has remained very strong in 2008, while our bank's net interest margin continues to be one of the highest in the UAE banking sector. Over the last years the bank has strongly invested in its franchise, its people and its systems and we remain well placed to continue to play a significant role in the further economic development of the UAE."
Follow Emirates 24|7 on Google News.