UNB declares dividend, bonus shares

Union National Bank (UNB), an Abu Dhabi-listed bank, announced today that it recorded a 16.6 per cent jump in net profits for the year 2010, to Dh1.35 billion, compared with Dh1.16b in 2009.

According to a statement issued by the bank, its operating profit for 2010 stood at Dh1.84b, a 25.2 per cent improvement over the Dh1.47b it recorded in 2009. The bank attributed the growth to its “resilient strategy and strength of its core businesses”.

“During this extended period that has witnessed the vulnerability to the vagaries of the global economy where various economic indicators and business confidence have remained persistently muted, it is encouraging to note that the financial and business performance of the UNB Group has been satisfactory over the full economic cycle with the Group continuing to grow in a measured manner in 2010,” said Mohammad Nasr Abdeen, UNB’s CEO.

The bank said its board has recommended a distribution of cash dividend of 10 per cent and bonus shares of 10 per cent for fiscal 2010, subject to necessary approvals. It also said that it has received an approval from the Central Bank of Kuwait to open a branch in Kuwait, which would further expand its presence in its targeted markets and the GCC.

The bank’s operating income for the year 2010 was Dh2.55bn (2009: Dh2.12b), an increase of 20.6 per cent compared to the corresponding period, led by a double-digit growth in both net interest income and non-interest income.

Net interest income for 2010 was up by 18.4 per cent to Dh1.95b (2009: Dh1.65b) while non-interest income grew by 28.4 per cent to Dh603.9m (2009: Dh470.2m). The increased net interest income was achieved through higher business volumes and an improved net interest margin, resulting from a sharp asset liability management throughout the year as some of the downside risks have ebbed, the bank said.

Fees and commission income, the single most significant contributor to the non-interest income increased in 2010 by 25.9 per cent to reach Dh559.8m (2009: Dh444.6m).

The bank added that it “continued to invest in its key resources as also to selectively expand its branch network resulting in an increase in operating expenses in 2010 by 10.2 per cent to Dh715m (2009: Dh648.6m).”

The bank’s efficiency ratio (cost to income) for 2010 improved to 28 per cent (2009: 30.6 per cent), well below its target medium-term range of between 30 and 35 per cent, it said.

Loans and advances increased by 11.4 per cent to Dh56.6b as at 31 December 2010 (31 December 2009: Dh50.8b), up by 11.4 per cent compared to 31 December 2009, with the focus being on prudent and selective lending, the statement added.

Customer deposits grew by 13 per cent to Dh57.9b (31 December 2009: Dh51.3b), with the loan to deposit ratio as at 31 December 2010 being 97.6 per cent (31 December 2009: 99 per cent).

The bank said that “adequate liquidity was maintained during the whole of 2010, with liquid assets (cash and balances with central banks and due from banks) constituting 21.2 per cent of the total assets as at 31 December 2010 (31 December 2009: 22.2 per cent).”

In 2010, the bank repaid its medium-term borrowings of Dh1.6b under the Euro Medium Term Note programme through its existing funding base, without having to resort to refinance this borrowing.

The ratio of non-performing loans to gross loans, after excluding Dubai World as an impaired asset, was 1.4 per cent as at 31 December 2010 (31 December 2009: 1.5 per cent). After including Dubai World as an impaired asset, this ratio was 4.3 per cent as at 31 December 2010.

Specific impairment charge on loans includes provisions taken against the exposure to Dubai World as also the additional provision taken in line with the Central Bank of UAE instructions for the exposure to the Al Gosaibi Group. The group bolstered its credit impairment allowance by recognising an impairment charge of Dh482.4m for 2010 (2009: Dh288.5m), an increase of 67.2 per cent over the previous year, which included Dh147.4m towards collective impairment allowance, representing 30.6 per cent of the impairment charge for 2010.

The return on average equity, excluding the Tier 1 capital notes for 2010 was 14.9 per cent (2009: 14.5 per cent) with the return on average assets for 2010 being 1.7 per cent (2009: 1.6 per cent).

The overall Basel II capital adequacy ratio computed in accordance with the Central Bank of UAE guidelines, remained strong, at 20.1 per cent as at 31 December 2010 (31 December 2009: 20.7 per cent) with the Tier 1 capital adequacy ratio being 15.2 per cent as at 31 December 2010 (31 December 2009: 15.5 per cent).

 

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