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National Bank of Abu Dhabi (NBAD) earned AED 1.406 billion for the quarter ended 31March 2014, up 31% sequentially from AED 1.077 billion in 4Q 2013 and relatively flat year-over-year, reflecting improving underlying fee income, FX income and investment gain trends.This represents diluted EPS of AED 0.27for 1Q 2014, which was flat with 1Q 2013.
The annualised return on average equity for 1Q 2014was 16.2%, up from12.7% in 4Q 2013 and down from 18.1% in 1Q 2013.
H.E. NasserAlsowaidi, Chairman of NBAD said, “In the first quarter, NBAD once again delivered solid financial results. The Bank’s results reflect continued strength in underlying revenue and earnings growth. As we enter 2014, NBAD will continue to focus on building a sustainable business model for the long term, maintaining its strong balance sheet and solid capital position.”
Mr. Alex Thursby, Group Chief Executive said, “Our results in the first quarter of 2014reflecta continuation of the momentum we began to see in the third and fourth quarters of 2013. Overall, we produced very good ‘business as usual’ results in a marketplace in which we continue to see margin compression. Our strategy enables us to generate growth at acceptable returns for our shareholders in this competitive environment. In the medium-term, our focus on becoming ‘core to our chosen customers’ with multiple product cross sales allows us to be prudent and optimise our loan balance sheet growth while activating cross-sell in FX, markets, Global Wealth and trade finance. In addition, we continue to shift our loan assets into our retail segments while continuing to grow our customer deposits and CASA. As always, our top priority is the strength of the balance sheet, and we remain intently focused on maintaining strong liquidity and capital positions.
During Q1, we hosted our 6th annual Global Financial Markets Forum (GFMF). The GFMF has become the premier financial markets forum in the region and is a great way to showcase the ‘best of NBAD’ to our clients from around the globe. At this year’s GFMF, we laid out the details of our 5-year strategyin our first ever Analyst & Investor Day. During the presentation, members of my top team and I explained our strategy to become‘core to our chosen customers’and capitalise on our unique positioning at the heart of the ‘West-East Corridor’.”We also establishedperformance metrics upon which we will measure ourselves over the next 5 years.
As we look toward the remainder of 2014 and the years to follow, I am confident that we will continue to execute against our strategy and achieve sustainable growth over time,”Mr. Thursby concluded.
ECONOMIC OVERVIEW
Global economic activity grew approximately 3% y-o-y in 2013, down from around 3.3% y-o-y in 2012. There are several trends which are favorable for the near-term economic outlook including easy monetary policy, record low interest rates and stimulus by major central banks. While risks to growth are still present, they seem to be diminishing. Looking forward, emerging markets are expected by many economists to register stronger growth performance in comparison to advanced economies in the coming years.
The UAE, which has the 2nd largest economy in the Arab world and 29th largest GDP in the world, will become part of the MSCI Emerging Market Index in June 2014, and has continued to benefit from its safe haven status during periods of instability in the region. The economy has shown signs of resilience amidst global and regional uncertainty and is beginning to generate returns from its diversification efforts. Last year, the non-oil sector constituted nearly 60% of nominal GDP, with strength coming from a recovery in real estate, trade and tourism. Over time, the objective is to continue to increase the contribution from the non-oil sector to the overall UAE economy.
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