Gulf Bank PJSC, (FGB), the leading financial partner of choice in the UAE, has once again registered record profit rates, where it announced its Net Profit for Q2’2012 at AED 1,017 million, 14% higher than the same period last year. This figure results in an 11% increase in the Net Profits of H1’2012 compared with H1’2011.

FGB’s strong financial performance was most notably a result of the growth of its loans, where a 6 % increase was witnessed in Q2’2012, compared to a flat performance during the previous quarter. New loans were originated by a diverse clientele base comprising of Government-related entities, private corporate, and retail clients, in addition to the multinational customers booked locally and overseas.

Through implementing a new financial strategy focusing on managing all balance sheet components, FGB grew its Net Interest Margin from 3.6% by end of Q1’2012 to 3.8% by end of Q2’2012.

FGB’s outstanding performance was recognised by a number of prestigious organisations, including leading financial publication Euromoney, which named it as the “Best Bank in the UAE” during its Awards for Excellence- Middle East 2012 ceremony. Capital Intelligence (CI) also affirmed FGB’s Long Term Foreign Currency Rating at ’A+’ in June 2012 with a “Stable” outlook, thereby highlighting its solid financial position. Furthermore, FGB was reaffirmed with an A+/stable outlook by Fitch earlier in 2012 and at A2 by Moody’s in August 2011,

Q2’2012 Income Statement Highlights
Registering a Net Profit of AED 1,017 million, FGB’s Q2 profits have grown by 14% in comparison to Q2’2011, and by 9% in comparison to Q1’2012.

Net Interest and Islamic financing income continued to grow in Q2’2012, where it stood at AED 1,350 million, 11% higher than Q2’2011. Furthermore, Corporate and Retail fees and commissions were recorded at AED 344 million, which marks a steady increase from AED 244 million in Q4’2011 to AED 307 million in Q1’2012.

The Core Banking Net Profits represented 97% of the total Net Profit of the group including businesses like Corporate, Retail, Treasury and Investments, Financial Institutions, Islamic and International. The remaining 3% was contributed by the subsidiaries and associated companies of the group.

FGB’s international operations started to play an important role in complementing the bank’s strong performance this quarter, actually, 5% of the group Net Profit was contributed by the bank’s global locations, namely Singapore, Qatar and India.
Commenting on FGB’s outstanding performance, Andre’ Sayegh, CEO of FGB, said: “Our consistent positive performance stands as a strong undisputed assurance to the effectiveness of our dynamic strategy, which will continue to steer our operations into the coming periods. As the UAE economy continues to pick up momentum, and we witness more favourable market conditions, FGB is committed to uphold its leading position in the local and regional markets alike.”

Performance in the First Half of the Year (H1’2012)
As has become customary for the bank, FGB continues to lead the local market in its efficiency in managing its group’s expenses, which amounted to AED 667 million for the first half of 2012, Though a 20% increase in comparison with H1’2011, the bank has, however, been able to maintain its cost to income ratio at a low rate of19.3 %,which is the lowest registered ratio in the UAE banking industry.

Abdulhamid Saeed, FGB Managing Director and Board Member, commented: “In spite of the international market turbulences which have affected a number of financial institutions, FGB emerges as the solid institution capable to withhold tough times and to outperform during good times due to its balanced strategy. As the UAE continues to be seen as a safe refuge for investors in the region, this is definitely supporting the bank to realize its strategy moving forward. Our Financial strategy has always been based on wise risk management, particularly on maintaining a solid balance sheet.”

Balance Sheet – Liquidity
During Q2’2012, FGB’s strategy revolved around maintaining comfortable liquidity levels. Despite the fact that the loan to deposits ratio at the end of the quarter stood at 106%, the bank regulatory ratio of advance to stable deposit of 89.4% remained far below the maximum allowance of 100%. Thereby, the liquid asset ratio was maintained at 12%. The bank started also benchmarking its current liquidity ratios to the new ones to be implemented starting 2013 as per the new UAE CB regulations on liquidity.
“We are in a very solid position to be fully compliant with the new circular” said André Sayegh.

During the first half of 2012, through its regular access to the capital markets, FGB was successful in raising US$ 500 million worth of Sukuk and US$ 200 million in the form of a bilateral loan. During the same period FGB has reimbursed 3 bilateral loans worth US$ 375 million which matured in Q2’2012.

Capitalisation and Earnings per Share
By the end of Q2’2012, Total Shareholders’ Equity stood at around AED 27 billion, and Capital Adequacy Ratio was at 22.0%, including a Tier 1 Ratio of 19.5%.The Earnings per Share for the first six months of 2012 amounted to AED 0.64, which was 19% higher than the same period in 2011 (AED 0.54).

Abdulhamid Saeed stated: “FGB’s strategy is focused on growing its businesses and rewarding investors accordingly, FGB is firmly placed in a strong position to implement future growth plans, which will have in parallel a positive impact on the growth of its Earnings per Share.”

Asset quality and Provisioning
The Asset quality was stable during the second quarter of 2012. The ratio of Non Performing Loans (NPLs) to Gross Loans was at 3.6%, and provision coverage was set at 92%.

“FGB’s management is satisfied with the stabilization of NPLs over the past 18 months and is comfortable with this level of coverage. Since the application of the new UAE Central Bank circular on reporting the NPLs at 90 days instead of 180 days the NPLs to Gross Loans ratio ranged between 3.7% and 3.4%, and we expect further reductions over the coming years” said Sayegh.

Sayegh commented: “FGB has been internationally recognised for its leading stature in the banking sector, where it was placed among the list of the top banks in the GCC by the leading publication “Arabian Business”. It was also listed in “The Banker’s” “Top 1,000 World Banks 2012” list, where it ranked in the 9th spot on a regional scale and in the 150th position on a global scale by capital strength.”

He concluded: “The basis of FGB continuous success has always been in adopting a dynamic yet balanced strategy to deal with all our stakeholders. In addition, the conservative approach to risk management has proved to be the winning approach. This is validated on the ground by the consistent positive performance of FGB quarter after quarter. It is reflected as well in our conservative international expansion model, which has started to generate a reasonable profit to the bottom line and is planned to bring a lot of value over the coming years.”

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