NBF announces results for the nine month period ended 30 September 2023.
Highlights:
- NBF recorded year-on-year growth of 122.5% to close the nine month period with a net profit of AED 513.2 million compared to AED 230.7 million in the corresponding period of 2022. On the back of a robust Q3 2023 performance, NBF posted a net profit of AED 181.0 million in the third quarter of 2023, a rise of 125.8% over the corresponding quarter of 2022, which reflects the bank’s high level of resilience in its core business, an improvement in the impairment provisions and the high interest rate environment.
- Aided by higher net interest income and net income from Islamic financing and investment activities and fee income, NBF posted an operating profit of AED 1.2 billion for the nine month period, a substantial increase of 26.6% compared to AED 932.5 million in the corresponding period of 2022 and up 22.3% for the three month period ended 30 September 2023 over the corresponding period of 2022.
- Operating income reached AED 1.7 billion for the nine month period ended 30 September 2023, up 27.7% compared to AED 1.3 billion in the corresponding period of 2022, reflecting the benefit from increasing interest rates and enhanced asset and liability management. Operating income growth of 24.1% was recorded for the three month period ended 30 September 2023 over the corresponding period of 2022.
- Net interest income and net income from Islamic financing and investment activities grew 47.0% to AED 1.3 billion for the nine month period ended 30 September 2023 compared to AED 855.4 million in the corresponding period of 2022. It was up 29.1% for the three month period ended 30 September 2023 compared to the corresponding period of 2022.
- Net fees, commission and other income grew 2.6% to AED 310.4 million for the nine month period ended 30 September 2023 compared to AED 302.7 million in the corresponding period of 2022.
- Foreign exchange and derivatives income stood at AED 119.3 million for the nine month period ended 30 September 2023 compared to AED 142.5 million in the corresponding period of 2022.
- Operating expenses increased by 30.3%, reflecting NBF’s investments in its businesses, systems, infrastructure and people. These investments include a set of digital initiatives to further enhance the focus on exceptional customer service through digital adoption and innovation. Further, the impact of inflation continued to affect our operating expenses. NBF’s cost-to-income ratio stood at 30.0% compared to 29.4% in the corresponding period of 2022; remaining in the mid-industry range reflecting on-going cost discipline.
- NBF maintained its policy of prudent and transparent recognition of problem accounts taking into consideration the new credit risk standards being introduced by the Central Bank of the UAE and the risk of recessionary trends. NBF booked net impairment provisions of AED 667.6 million for the nine month period ended 30 September 2023 compared to AED 701.8 million in the corresponding period of 2022. During the period, the bank’s impairment reserve substantially reduced by 50.9% to AED 82.6 million compared to AED 168.2 million as at 31 December 2022. Total provision coverage ratio improved to 124.1% compared to 101.5% as at 31 December 2022. The NPL ratio improved to 5.4% compared to 6.9% as at 31 December 2022, as the bank successfully progressed the resolution of a few exceptional exposures.
- Loans and advances and Islamic financing receivables rose by 3.0% to reach AED 27.7 billion compared to AED 26.9 billion at 2022 year-end.
- Investments and Islamic instruments increased by 16.7% to reach AED 7.4 billion compared to AED 6.3 billion at 2022 year-end, up by 25.2% from 30 September 2022 evidencing the deployment of a portion of liquidity towards a high-quality investment book offering good risk-to-return as well as access to market liquidity.
- The capital adequacy ratio (CAR) stood at 18.9% (Tier 1 ratio of 17.7% and CET 1 ratio of 14.1%) compared to 18.6% (Tier 1 ratio of 17.4% and CET 1 ratio of 13.6%) at 2022 year-end and is being maintained at this level to support the bank’s ability to grow and meet any challenges that may arise from the swiftly evolving global economy.
- Customer deposits and Islamic customer deposits increased by 4.1% to reach AED 37.2 billion compared to AED 35.7 billion at 2022 year-end, and were up by 13.8% from 30 September 2022. Current and Saving Accounts (CASA) deposits stood at 40.7% of total customer deposits softening the impact of increasing rates for fixed term products on deposit costs.
- Total assets rose by 4.9% to reach AED 50.0 billion compared to AED 47.6 billion at 2022 year-end, up by 12.6% from 30 September 2022.
- Ample liquidity has been maintained with lending to stable resources ratios at 70.4% (2022: 72.1%) and eligible liquid assets ratio (ELAR) at 26.1% (2022: 24.9%), well ahead of Central Bank of the UAE’s minimum requirements.
- Return on average assets improved to 1.4%, up from 0.7% for the corresponding period in 2022.
- Return on average equity improved to 11.2%, up from 5.4% for the corresponding period in 2022.
Dr. Raja Easa Al Gurg, Deputy Chairperson said:
“These pleasing results demonstrate the on-going impact of our business strategy, resilience in our core business and sound improvement in asset quality. Good growth across our operating and net performance augurs well for the results of the full year and beyond, despite the numerous challenges in the global economy and the prevailing macroeconomic uncertainty.
Spurred by strong liquidity conditions underpinned by high oil prices, foreign capital inflows and strong growth in oil and non-oil sectors, the UAE’s economic growth forecast has been revised for 2023 and 2024 to expand at 3.4 per cent and 3.7 per cent respectively.
Benefitting from this positive economic outlook, NBF is geared up and well placed through the strength of its diversified balance sheet for growth in the current interest rate cycle.
Looking ahead, NBF will continue to focus on opportunities to enhance value creation, diversify revenue streams, digital initiatives for exceptional customer service, cost discipline and risk management and compliance practices. In parallel, the bank is upholding heightened focus on environmental, social and governance [ESG] activities which remain vital to the NBF franchise for a sustainable future.”
