National Bank of Abu Dhabi (NBAD) – the Safest Bank in the Middle East* - reported 12% increase in net profits to AED 1,041 million for the quarter ended 31 March 2012 compared with AED 927 million earned in the corresponding quarter of 2011.

Net profits increased by 44% over the fourth quarter of 2011.

The annualised return on shareholders’ funds for the quarter is 17.2% in line with the targets for 2012 and the medium-term.

H.E. Nasser Alsowaidi, the Chairman of NBAD, said: “Regional and global uncertainties continue to have an overhang on business sentiments and growth. Despite this, NBAD continues to perform well, investing in its franchise, systems and most importantly, in its people. The solid foundation that has been build over the years provides a firm footing to explore new horizons and achieve ambitious targets in the decade to follow.”

Mr Michael Tomalin, the Group Chief Executive, commented: “The first quarter result has got the Group off to a strong start for the year in what remains a generally difficult market for banking. Our deposits rose sharply this quarter but core deposits grew more steadily. The liquidity of the Group remains strong and loan balances continue to grow at round AED 1 billion per month. The Bank’s expansion programmes, both at home and abroad, remain on track, and our offices in Malaysia and China are planned to open in the second quarter of this year.”

OPERATING INCOME
Operating income for the quarter reached AED 2,030 million, up 7.9% compared with AED 1,881 million for the corresponding quarter in the previous year. Net interest income and net income from Islamic financing contracts for the first quarter of 2012 rose 5.9% to AED 1,460 million as compared to the first quarter of 2011 while non-interest income was higher by 13.3% at AED 570 million.

The net interest margin was 2.14% for the quarter, lower than 2.48% for the corresponding quarter in 2011 due to increase in short-dated secured lending and maintaining a liquid balance sheet. Loans and advances comprise only 56% of total assets as at 31 March 2012 lower than last year’s average of 63%.

EXPENSES
Operating expenses for the quarter were AED 645 million, higher by 14% compared with the corresponding period.

The cost to income ratio was 31.8% for the first quarter of 2012. This is lower than the 32.5% recorded for the year 2011 and remains below the Group’s medium-term cap of 35%.

During the quarter, we expanded our domestic presence to 122 branches and cash offices and 529 ATMs. Our global headcount increased to 5,812 staff as on 31 March 2012.

Our investments in the franchise, network and systems, products and people are in line with our vision to be recognised as the World’s Best Arab Bank.

OPERATING PROFITS
Operating profits in the first quarter of 2012 grew by 5.2% to AED 1,384 million over the corresponding quarter of 2011, mainly driven by the international businesses and financial markets businesses, which achieved a growth of 30% and 15% year-on-year, respectively. New products, clients and assets under management (AUMs) coupled with some recovery in capital market activities enabled Global Wealth businesses to triple its operating profits to AED 29 million from AED 10 million in the previous year.

IMPAIRMENT CHARGES

Net impairment charges were AED 313 million for the quarter compared to AED 365 million in the corresponding quarter of 2011.

Collective provisions of AED 2,320 million represent 1.5% of the performing credit risk-weighted assets (Central Bank’s 2014 target – 1.5%).

Non-performing loans increased to AED 5,100 million representing 3.03% of the loan book.

BALANCE SHEET
Total Assets were AED 289.3 billion as at 31 March 2012, 13.2% up on 31 December 2011 and 23.9% up on 31 March 2011.

Loans and advances to customers were AED 163.2 billion, up 2.3% on 31 December 2011 and 14% up on 31 March 2011.

Customer deposits at AED 187.7 billion grew strongly by 23.6% in the first quarter of 2012 and were higher by 33.1% as compared to 31 March 2011.

Capital resources stood at AED 35.1 billion after dividend payments of AED 120 million on Government of Abu Dhabi (GoAD) Tier-I capital notes and AED 861 million to shareholders as a cash dividend for 2011. Capital resources consist of shareholders’ funds of AED 23.1 billion, GoAD Tier-I capital notes of AED 4.0 billion and subordinated convertible notes of AED 8.0 billion.

Capital adequacy ratios (Basle-II) remain well above the minimum 12% required by the UAE Central Bank and (prospective) Basle-3 with a capital adequacy ratio of 20.6% and a Tier-I ratio of 15.8% as at 31 March 2012.

EMIRATISATION
The Emiratisation ratio was 38.3% with the headcount of UAE Nationals increasing by 2% in the first quarter of 2012. NBAD participated in the Tawdeef Career Fair in Abu Dhabi and National Career Exhibition in Sharjah as part of its Emiratisation drive to attract, retain and continuously develop the skills of UAE nationals.

The Bank opened a second call center in Al Ain which is managed and staffed solely by Emirati women.

CREDIT RATINGS
NBAD’s long term ratings continue to remain amongst the strongest combined ratings of any financial institution in the MENA region with ratings from Moody’s Aa3, Standard & Poor’s A+, Fitch AA-, RAM (Malaysia) AAA and R&I’s (Japan) rating of A+.

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