National Bank of Abu Dhabi (NBAD) earned its highest single quarter net profit of Dh1.031 billion for the first quarter ending March 31, compared with Dh770 million the bank posted for the corresponding quarter last year, representing a growth of 34 per cent.

NBAD's profit for the last quarter of 2009 was Dh429m. The annualised diluted earnings for the first quarter were to the tune of Dh1.67 per share.

The bank's total assets stood at Dh201bn, which was two per cent higher compared with Dh197bn for December 31, 2009. Loans and advances to customers showed a 15 per cent increase over March 2009 to Dh133.6bn. Customer deposits during the period increased by 17 per cent to Dh114.7bn, due primarily to the Dh5.6bn Ministry of Finance deposits that were transferred to Tier II capital during the first quarter of 2010.

Net impairment charges for March 2010 were Dh225m of which collective provisions were at Dh55m, whereas the specific provisions and write-offs were Dh208m, offset by recoveries of Dh38m.

The impaired loans during the first quarter of 2010 were Dh1.778bn on a total portfolio of Dh134bn and represent an NPL ratio of 1.30 per cent for the bank.

"In the current UAE economic environment, where confidence is growing but recovery is still subdued, the group continues to focus on building revenues and strengthening customer relationships," said Nasser Alsowaidi, Chairman of the bank. "Our organic growth and investments in staff, systems and infrastructure will ensure long-term sustainability," said Alsowaidi.

While the total revenue increased by 11 per cent to Dh1.772bn compared with the first quarter of last year, the net interest income for the bank improved 13 per cent when compared with March 2009 and other income increased by 56 per cent to Dh533m, mainly due to investment and revaluation gains of Dh97m, according to data.

During the period, the operating expenses increased by 14 per cent to Dh494m compared with the corresponding period last year. "The bank's cost to income ratio of 27.9 per cent remains well below our 35 per cent medium-term expected level, a statement from the bank said.

NBAD can contain all possible bad loans

National Bank of Abu Dhabi (NBAD) is well equipped to contain any possible bad loans that might emerge from the imminent settlement on Dubai World Group's credit issues, according to the bank's top official.

Responding to a query on how the bank views its non-performing loans to grow during the year, Michael Tomalin, NBAD Chief Executive said even if the NPLs ratio grows from the current level of 1.3 per cent to two per cent during the year, the bank has already made comfortable provisions.

"We do not have any exposure to Dubai World, the holding company, but only to the subsidiaries – Limitless and Nakheel. And these credits are dealt with separately from that of Dubai World," Tomalin said.

While the total NPLs are Dh1.778 billion as of March end, the collective provisions stand at Dh1.66bn and the total provisions at Dh2.855bn, a fact that stands testimony to the bank's a comfortable position on provisioning against NPLs. While the net impairment charges for the quarter ending March were Dh225m of which the collective provisions were at Dh55m. The specific provisions and write-offs were Dh208m, offset by recoveries of Dh38m.

The Dh1.66bn collective provision made by the bank represents 1.25 per cent of credit risk weighted assets.