First Gulf Bank’s Q1 Profit Rises 11 Per Cent

DUBAI - First Gulf Bank, or FGB, recorded an impressive 11 per cent jump in first-quarter net profit this year, despite difficult market conditions due to the global financial crisis.

The net income of the Abu Dhabi-based bank advanced to Dh750 million, or Dh0.47 a share, compared with Dh675 million a year ago.

“Despite the exceptionally difficult market conditions, the bank’s success in setting strategic priorities and objectives has helped us overcome such conditions,” Chief Executive Officer Andre Sayegh said in a statement.

The bank generated 95 per cent of the net profit through its core banking businesses — corporate, retail, treasury, investments and Islamic banking.

Banks in the country were hurt last year as the worst financial crisis since the 1930s crimped lending, hit investment banking activity and battered share prices. Abu Dhabi injected a combined Dh16 billion in five local banks including First Gulf Bank to cushion losses amid the financial crisis.

During the quarter, deposits increased by Dh1.7 billion to reach Dh75.7 billion, while loans also witnessed a marginal growth of 5 per cent to reach Dh83.6 billion.

Total revenue rose 29 per cent to 1.319 billion. Net interest and Islamic financing for the quarter increased 106 per cent to Dh875 million, a 12 per cent rise over the fourth quarter of 2008. Net interest margin at 3.6 per cent is significantly higher than the 2.3 per cent reported for the same period in 2008.

Core banking non-interest income mainly composed of fee, commission and treasury and investments income at Dh407 million is 45 per cent higher than the Dh281 million achieved during the first quarter of last year. The same comparable revenue of the fourth quarter of 2008 was Dh122 million.

Expenses of the quarter declined by Dh118 million, or 29 per cent, to Dh293 million. “Our cost to income ratio is a clear evidence of the bank’s efficiency in managing expenses which is helping the profitability of the organisation,” said Sayegh.

The bank’s capital adequacy ratio increased to 17.3 per cent after the government added Dh4 billion to its Tier-I capital in February. This will improve further to 21 per cent when it converts Dh4.5 billion of federal government deposits it received in a liquidity support plan into Tier-2 capital.

The total assets of the bank at the end of the first quarter of 2009 reached Dh109 billion, 2 per cent higher than the figure reported by end 2008.

During the first quarter, the bank paid back in full its three-year syndicated loan of $750 million.


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