First Gulf Bank PJSC, (FGB) has released its Q2’2013 financial results, reconfirming it’s upwards growth trajectory. The Bank recorded a net profit of AED 1,167 million in Q2’ 2013, representing an increase of 15% compared to the same period in Q2’ 2012. During the first half of 2013, the Bank has recorded a 13% increase in Net Profits at AED 2,213 million, compared to the same period in 2012.

FGB achieved record revenues of AED 2,018 million in Q2’2013 thanks to the continuation of its successful revenue diversification strategy in term of geographies, locally and internationally as well as by enhancing its product offerings. The positive results were reflected in the loans portfolio which grew by 7% during the first half of 2013 and grew by 11% over the past 12 months.

2013 is proving a stellar year for FGB. Last month, the Bank signed an agreement to acquire Dubai First, the consumer financial services business, from Dubai Financial Group (LLC) for AED 601 million in cash. This acquisition supports FGB’s strategy to enhance its services and expands its UAE customer base.

Earlier in 2013, FGB was recognised for the second consecutive year as the ‘Best Local Bank in the United Arab Emirates’ for 2012 by EMEA Finance, as well as winning ‘Best Bank in the United Arab Emirates’ and ‘Best Bancassurance’ titles at The Banker Middle East Industry Awards 2013. FGB has also recently been ranked as the 3rd most powerful company in the UAE and 6th leading bank in Forbes’ ‘Top 500 in the Arab World’ list.

Furthermore, so far in 2013, rating agencies have raised FGB’s status as well. Fitch Ratings upgraded the Viability Rating (VR) from ‘bbb-‘ to ‘bbb’, Capital Intelligence upgraded the bank’s long term rating from ‘A’ to ‘A+’ while Moody’s Investors Service upgraded FGB’s standalone bank financial strength rating (BFSR) from D+ to C-.

Q2’2013 Income Statement Highlights

FGB’s Q2’2013 Net Profit of AED 1,167 million is 15% higher than the same period last year, and 12% higher than Q1’2013.

Net Interest and Islamic financing income continued to grow in Q2’2013, standing at AED 1,475 million during the last quarter, 9% higher than Q2’2012. Furthermore, Corporate and Retail fees and commissions for the quarter were recorded at AED 460 million, which is 34% higher than Q2’2012.

Commenting on FGB’s outstanding performance, André Sayegh, CEO of FGB, said: “We are driving our business forward based on a foundation we call the 3 S. We are building Specialisation, Synergy and Speed. We are embedding this new culture across our organization in order to support deeper domestic and international expansion though a larger physical presence more customer focus, as well as via introducing new financial products. Our geographic expansion over the coming quarters remains focused on Asia.”

Performance in the First Half of the Year (H1’2013)

FGB continues to lead the local market in expense management, which amounted to AED 802 million for the first half of 2013, a 20% increase in comparison with H1’2012. The Bank has, however, been able to maintain its Cost to Income ratio at a low rate of 20.6%.

FGB maintained its Net Interest Margin at 3.62% at the end of June 2013, compared with 3.58% registered for Q1’2013.

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 played an important role in complementing the Bank’s strong performance during this first half of the year. 7% of the group Net Profit was contributed by the Bank’s global locations, compared to 5% a year before.

Loans and Advances grew by AED 8.4 billion, marking an increase of 7%. The growth was contributed by Corporate (58%), Retail (29%) and International Business (13%).

Abdulhamid Saeed, FGB Managing Director and Board Member, commented: “First Gulf Bank’s strategy has always been based around two core principles: providing the best service to our customers and providing the best returns to our shareholders. We do this via understanding market needs and responding accordingly with innovative products and services in the right place at the right time. This single-minded purpose is enabling us to maintain, and indeed build on, our long-held position as one of the top financial partners of choice in the communities in which we operate. FGB remains fully committed to playing its role in the development of the UAE’s fast growing economy and in helping to build the financial foundations necessary for prosperity across the different identified key sectors.”

Balance Sheet – Liquidity

FGB’s liquidity objective is to always maintain comfortable liquidity levels. Whilst the loan to deposit ratio at the end of the quarter stood at 99%, the Bank’s regulatory ratio of advance to stable deposit of 83% remained far below the maximum allowance of 100%.

“We are in a very solid position to be fully compliant with the future Central Bank’s Basel III requirements in terms of liquidity” said André Sayegh.

Capitalisation and Earnings per Share

By the end of Q2’2013, Total Shareholders’ Equity stood at around AED 29 billion, and Capital Adequacy Ratio was at 18.8%. The Earnings per Share for the first six months of 2013 amounted to AED 0.73, which was 20% higher than the same period in 2012 (AED 0.61).

Saeed stated: “We remain committed to consistently increasing the returns for our shareholders. We will do this by an unrelenting focus on cautious risk management, effective balance sheet management and a customer-centric approach, which will support our goal of long-term growth.”

Asset quality and Provisioning

Asset quality showed slight changes during the second quarter of 2013. The ratio of Non Performing Loans (NPLs) to Gross Loans was at 3.6%, and provision coverage was set at 80%. FGB expects this to be back to the 90%-100% in future quarters.

“We witnessed a slight increase in the rate of Non Performing Loans due to a cautious downgrading of a few accounts. However, these rates remain within manageable low levels, and we believe that the coming quarters will witness improvements in this area,” said Sayegh.
 

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