(MENAFN- Khaleej Times) Emirates NBD on Sunday became first UAE bank to report annual pre-impairment operating profit above Dh10 billion as it recorded strong growth in all business units last year.
The largest bank in the UAE by total income and branch network said its net profits surged 58 per cent to Dh5.1 billion in 2014 as the bank's balance sheet strengthened further due to an improvement in the capital, liquidity and credit quality ratios.
The bank's impaired loan ratio improved significantly to 7.8 per cent in 2014 following reclassification of its exposure to Dubai World, writing-off of fully provided retail loans and an increase in recoveries and repayments on the back of an improved economy. Conservative provisioning of Dh5 billion helped boost the impaired loan coverage ratio to 100.3 per cent, reaching the bank's target coverage level.
The bank's capital adequacy ratio improved by 1.5 per cent to 21.1 per cent due to retained profits. The ability of the bank to attract and retain stable deposits helped improve the advances to deposit ratio by 4.3 per cent to 95.2 per cent.
The lender said it's total income climbed 22 per cent to Dh14.4 billion last year while net interest income grew 17 per cent to Dh9.5 billion. Non-interest income also surged 33 per cent to Dh4.9 billion.
The bank also reported an 82 per cent jump in fourth-quarter net profit at Dh1.23 billion compared to Dh673 million in the same period of 2013. The bank's board of directors recommended an increase in the 2014 dividend to 35 fils from 25 fils per share.
"2014 was a momentous year for Emirates NBD as we reached a number of key milestones. We are the first bank in the UAE, and for the first time in our 50 year history, to report an annual operating profit before impairment in excess of Dh10 billion. This strong operating profit, coupled with conservative provisioning, has enabled Emirates NBD to reach 100 per cent coverage ratio for impaired loans and successfully put legacy issues behind us," Shaikh Ahmed bin Saeed Al Maktoum, chairman, Emirates NBD, said.
The bank, which has 215 branches and 889 ATMs and SDMs in the UAE and overseas, said its deposits increased by eight per cent to Dh258.3 billion and gross loans grew by three per cent during 2014. The total assets rose by six per cent to Dh363 billion last year.
"Gross loans grew by five per cent if we exclude the write-off of fully provided for retail loans," the bank said, adding that expenses rose five per cent to Dh4.38 billion last year.
Hesham Abdulla Al Qassim, vice-chairman, Emirates NBD said the bank is well placed to take advantage of future opportunities in Dubai and the region.
"2014 saw Emirates NBD celebrate many major achievements. Net profit increased by 58 per cent to Dh5.14 billion. This is driven by strong growth in both net interest income and non-interest income," he said.
Shayne Nelson, group chief executive officer of Emirates NBD, said the group's total income grew by 22 per cent due to increased volumes, a more profitable asset mix and a more efficient funding base.
"We were able to widen margins despite significant competition and liquidity has significantly improved in absolute and qualitative ratios. Costs remain firmly under control with a cost-to-income ratio of 30.4 per cent for 2014," he said.
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