FUJAIRAH: The National Bank of Fujairah (NBF) has reported an increase in operating profit for 2017 of Dhs913.6 million, up by 5.5 per cent from the 2016 figure of Dhs866 million.

“This reflects a high level of resilience in the bank’s core business and enhanced balance sheet management in a rising interest rate environment,” the bank said in a statement.

The bank’s strong operating profit enabled it to absorb elevated level of impairment losses and record a growth in net profit of 2.5 per cent to Dhs471.9 million compared to Dhs460.4 million in 2016.

“The Board is encouraged by the continued development and success of the NBF franchise,” according to its Chairman, Sheikh Saleh Bin Mohammed Al Sharqi. “NBF has delivered strong performance through its renewed focus on being the financial partner for business, and meeting its customers’ professional and personal needs. NBF’s customer centric business philosophy, successful track record of execution and adaptability to change enables it to achieve exceptional client satisfaction and generate exceptional shareholder value.”

The Bank’s Deputy Chairman, Easa Saleh Al Gurg, commented that “NBF’s solid performance was achieved in the face of the ongoing challenges in the business environment, underlining its focus on true value creation, exceptional customer service and the development of an agile business model. Prudent risk management and corporate governance practices, strong capital adequacy, healthy liquidity and success in leveraging technology continue to enhance the Group’s ability to navigate through times of uncertainty and allow us to emerge stronger for future growth.”

Operating income at Dhs1.4 billion saw a growth of 4.5 per cent compared to 2016. Income from investments and Islamic instruments increased to Dhs19.3 million compared to Dhs11.1 million in 2016, a growth of 73.6 per cent.

Net interest income and net income from Islamic financing and investment activities for the year grew by 8.2 per cent to Dhs917.6 million compared to 2016.

Operating expenses increased by 2.6 per cent, reflecting NBF’s disciplined cost management, prudent investments in our businesses, systems and infrastructure, including a set of digital initiatives to enhance our future offerings and customer service. Cost-to-income ratio stood at 33.7 per cent, compared to 34.4 per cent in 2016.

NBF’s prudent loan loss provisioning policy resulted in net impairment losses of Dhs441.7 million compared to Dhs405.5 million in 2016. The NPL ratio was 5.53 per cent compared to 4.95 per cent as at December 31, 2016. Total provision coverage ratio stood at 89.5 per cent compared to 101.3 per cent as at 31 December 2016.

Loans and advances and Islamic financing receivables rose 5.5 per cent from Dhs22.8 billion at 2016 year end to Dhs24.1 billion.

Customer deposits and Islamic customer deposits increased by 7.4 per cent from Dhs25.9 billion at 2016 year end to Dhs27.9 billion.

Investments and Islamic instruments were up 7.3 per cent, representing 5.2 per cent of total assets.

Shareholders’ equity of Dhs4.9 billion showed an increase of 6.8 per cent from the 2016 year end.

Strong capital adequacy and lending to stable resources ratios were maintained at 17.5 per cent (Tier 1 ratio of 15.1 per cent) and 86.9 per cent respectively, well ahead of the UAE Central Bank’s minimum requirements. The bank continues to maintain a high eligible liquid assets ratio at 24.1 per cent and its Basel III net stable funding ratio stood at 107.1 per cent, while its liquidity coverage ratio was 270 per cent.

Return on average assets was 1.3 per cent (December 31, 2016: 1.4 per cent) and return on average equity was 10.0 per cent (December 31, 2016: 10.4 per cent).

Taking into account the 2017 performance, a distribution of profits of 15 per cent (2016: 15 per cent) has been recommended in the form of cash dividends of 7.5 per cent (2016: 7.5 per cent) and bonus shares of 7.5 per cent (2016: 7.5 per cent) of the paid-up capital.

WAM