NBF's Q1 net profit 31% lower at Dh55.4m
Core businesses maintained growth in line with previous quarters on the back of strong growth in volumes despite pressure on margins due to excess domestic dirham liquidity and lower inter-bank interest yields, the bank said.
Operating income excluding investment income showed a growth of 33.9 per cent compared to corresponding quarter of 2007. Net interest income rose by 27.9 per cent and fee income grew by 33 per cent, the bank said. Its focus on foreign exchange sales contributed the best quarter ever with 76.3 per cent growth in exchange income compared to the first quarter of 2007.
"Earnings at the net level were impacted by the global investment climate causing a significant decline in the fair value of the bank's investment portfolio," the statement said. Investment losses for the quarter were Dh30.3m compared to profit of Dh22.5m in the year-earlier period. "Management considers the fair value losses as industry driven and expects to see a recovery subject to global market conditions," the statement said.
"While first quarter results were affected by external factors, we are pleased to maintain the consistency of earnings in our core business areas and continued progress in retail and SME businesses. The focus will continue to add value for shareholders," CEO Steve Mullins said.
Total assets and liabilities at Dh12.3bn and Dh10.6bn respectively grew by 42.1 and 51.6 per cent over Q1-2007. Return on average equity dropped from 19.8 per cent in 2007 to 12.7 per cent while return on average assets was down to 1.8 per cent as opposed to 3.7 per cent in 2007 reflecting lower level earnings due to fall in income on account of investment's fair value adjustment.
Total shareholders' equity as of March 31 is Dh1.7bn and the bank's capital adequacy ratio stood at 14.6 per cent against the Central Bank minimum of 10 per cent.
Operating expenses increased by 17.8 per cent, which reflects investment in new business initiatives, governance and infrastructure and strengthening of human capital, the bank said.
Cost to income ratio was 40.4 per cent compared to 27.7 per cent in the year-earlier period. However, adjusted for loss/income from investments, the ratio would be 30.4 and 34.5 per cent for respective periods, the lender said.