Highlights:
- NBF recorded year-on-year growth of 46% to close the six-month period at a net profit before tax of AED 484.9 million compared to AED 332.1 million in the corresponding period of 2023. Further, NBF posted a net profit after tax of AED 441.2 million for the half year with a corporate tax charge of AED 43.8 million. On the back of a strong Q2 2024 performance, NBF posted a net profit before tax of AED 210.1 million in the second quarter of 2024, a rise of 16.7% over the corresponding quarter of 2023. These results exhibit the bank’s continued focus on good quality business opportunities and the effective management of margins and liquidity. The on-going high interest rate environment, improvement in impairment provisions, careful management of costs and buoyant market conditions, in what continues to be an uncertain global environment, all contributed to this strong position.
- Supported by the higher revenue generation, NBF posted an operating profit of AED 845.8 million for the six-month period, a rise of 7.7% compared to AED 785.3 million in the corresponding period of 2023; and up 5.1% for the three-month period ended 30 June 2024 over the corresponding period of 2023.
- Operating income reached AED 1.2 billion, up 8.2% compared to AED 1.1 billion in the corresponding period of 2023; and up 5.6% for the three-month period ended 30 June 2024 over the corresponding period of 2023 reflecting the underlying business performance. Principal comments include:
- Net interest income and net income from Islamic financing and investment activities grew 7.0% to AED 882.5 million for the six-month period ended 30 June 2024 compared to AED 825.1 million in the corresponding period of 2023. It was up 3.1% for the three-month period ended 30 June 2024 compared to the corresponding period of 2023.
- Net fees, commission and other income rose 8.9% to AED 229.8 million for the six-month period ended 30 June 2024 compared to AED 211.0 million in the corresponding period of 2023. It was up 12.1% for the three-month period ended 30 June 2024 compared to the corresponding period of 2023.
- Foreign exchange and derivatives income experienced a good growth of 14.0% compared to the corresponding period of 2023, reaching AED 90.7 million for the six-month period ended 30 June 2024. It was up 15.7% for the three-month period ended 30 June 2024 compared to the corresponding period of 2023.
- Operating expenses increased by 9.4%, reflecting NBF’s investments in its businesses, systems, infrastructure and people. These investments include a set of digitalization initiatives to further enhance our focus on exceptional customer service through digital adoption and innovation. Further, NBF’s cost-to-income ratio stood at 29.8% compared to 29.4% in the corresponding period of 2023, remaining in the mid-industry range and reflecting on-going cost discipline.
- NBF maintained its policy of prudent and transparent recognition of problem accounts whilst taking into consideration the new credit risk standards being introduced by the Central Bank of the UAE. NBF booked net impairment provisions of AED 360.9 million for the six-month period ended 30 June 2024 compared to AED 453.1 million in the corresponding period of 2023, a reduction of 20.4%. The total provision coverage ratio stood at 109.0% compared to 120.2% as at 31 December 2023. The NPL ratio stood at 5.3% compared to 4.9% as at 31 December 2023.
- Total assets rose by 7.6% to reach AED 55.6 billion compared to AED 51.7 billion at 2023 year-end, up by 16.2% from 30 June 2023.
- Loans and advances and Islamic financing receivables rose by 5.5% to reach AED 29.4 billion compared to AED 27.9 billion at 2023 year-end, up by 3.7% from 30 June 2023.
- Investments and Islamic instruments increased by 8.6% to reach AED 8.8 billion compared to AED 8.1 billion at 2023 year-end, up by 34.2% from 30 June 2023; optimizing a portion of liquidity towards a high-quality investment book to augment value and return.
- Return on average assets was 1.6%, up from 1.4% for the corresponding period in 2023.
- Customer deposits and Islamic customer deposits increased by 7.8% to reach AED 41.6 billion compared to AED 38.6 billion at 2023 year-end, up by 19.3% from 30 June 2023. Current and Saving Accounts (CASA) deposits stood at 42.8% of total customer deposits, balancing the impact of higher rates for fixed-term deposit products.
- Ample liquidity has been maintained with lending to stable resources ratio (LSRR) at 66.8% (2023: 67.4%) and eligible liquid assets ratio (ELAR) at 29.7% (2023: 28.3%), well ahead of Central Bank of the UAE’s minimum requirements.
- Return on average equity was 13.3%, up from 11.1% for the corresponding period in 2023.
- The capital adequacy ratio (CAR) stood at 18.6% (Tier 1 ratio of 17.5% and CET 1 ratio of 14.1%) compared to 19.0% (Tier 1 ratio of 17.8% and CET 1 ratio of 14.2%) at 2023 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 evolving global economy. Further, at the General Assembly Meeting held on 26 June 2024, the shareholders, through a special resolution, approved the issuance of an amount up to USD ($) 275 million (AED 1.01 billion) Additional Tier 1 capital securities (“AT1 capital”) for the purpose of supporting the Bank’s capital adequacy ratio, scheduled for 16 September 2024. The issuance will be privately placed with the Government of Fujairah and the capital instruments shall include the terms and conditions required by the Central Bank of the UAE, including conversion into ordinary shares, at a conversion ratio of AED 2.85, within two years of the issuance being mandatory, subject to relevant competent regulatory approvals.
- NBF’s rating was re-affirmed at Baa1 / Prime-2 for deposits and A3 for the counterparty risk assessment by Moody’s, with a stable outlook, highlighting the bank’s underlying strength, prudent risk management and resilience.
Dr. Raja Easa Al Gurg, Deputy Chairperson said:
“We are pleased with the bank delivering another very strong set of results in the first half of 2024 and being honored with a number of prestigious awards and endorsements. We are particularly delighted that, during Q2 2024, the bank was ranked first by NAFIS in the medium-sized banking sector category, under the patronage of His Highness Sheikh Mansour Bin Zayed Al Nahyan, UAE Vice President, Deputy Prime Minister, Minister of Presidential Court, and Chairman of the Board of the Emirati Talent Competitiveness Council; has been awarded the ‘Best Cloud Implementation’, ‘Best Treasury Management Implementation’ and ‘Most Innovative Trading Platform’ awards at the recent MEA Finance Banking Technology Summit and Awards 2024; was recognized in the Forbes Middle East’s Top 100 Listed Companies; and was the winner of the ‘Leading Practices in Internal Audit Award 2024 in GRC category’ by the UAE Internal Auditors Association; showcasing our collective efforts and unwavering commitment to supporting the aspirations of UAE National talent, harnessing cutting-edge technology and embedding best-in-class practices.
NBF’s financial performance over the recent quarters underscores the importance of maintaining a well-informed and strategic approach to achieving sustainable growth. We remain focused on the delivery of our financial and operational targets; and appreciate the robust and broad-based performance across our business segments and local markets in what continues to be an uncertain global operating and economic environment.
Benefitting from the buoyant local market momentum and being the financial partner focused on our customers’ business and personal needs, NBF will continue to support the quality opportunities to enhance shareholder value, facilitated by strong capital adequacy, ample liquidity and a well-diversified balance sheet.”
