National Bank of Fujairah net profit before tax rose 80.8% in Q1 2024

National Bank of Fujairah (NBF) announced on Monday that it recorded a year-on-year growth of 80.8 per cent in net profit before tax of Dh274.8 million in the first quarter of 2024 compared to Dh152.0 million in the corresponding period of 2023.

NBF posted a net profit after tax of Dh251.1 million for the quarter with a corporate tax charge of Dh23.7 million. “These results evidence the bank’s continued focus on selective quality business growth, and the effective management of margins and liquidity. The continued high interest rate environment, continuing improvement in impairment provisions, careful management of costs and buoyant local market conditions, despite the broader uncertain geopolitical conditions and global environment, all contributed to this very strong position,” the bank said in a statement.

NBF posted an operating profit of Dh438.5 million for the three-month period, a rise of 10.2 per cent compared to Dh397.9 million in the corresponding period of 2023; and up 8.7 per cent quarter-on-quarter.

Operating income reached Dh614.0 million, up 10.8 per cent compared to Dh554.1 million in the corresponding period of 2023; and up 2.8 per cent compared to Q4 2023 reflecting the robust core business performance. Principal comments include:

Net interest income and net income from Islamic financing and investment activities rose 11.0 per cent compared to the corresponding period of 2023, reaching Dh448.4 million; and experienced a growth of 0.3 per cent compared to Q4 2023.

Net fees, commission and other income grew 6.1 per cent compared to the corresponding period of 2023, reaching Dh119.7 million; and experienced a rise of 11.5 per cent compared to Q4 2023.

Foreign exchange and derivatives income experienced a good growth of 12.3 per cent compared to the corresponding period of 2023, reaching Dh45.1 million for the three-month period ended 31 March 2024.

Operating expenses increased by 12.3 per cent, 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 28.6 per cent compared to 28.2 per cent 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 Dh163.7 million for the three-month period ended 31 March 2024 compared to Dh245.8 million in the corresponding period of 2023, a notable reduction of 33.4 per cent. The total provision coverage ratio improved to 128.4 per cent compared to 120.2 per cent as at 31 December 2023. The NPL ratio was maintained at the 2023 year-end level of 4.9 per cent.

Total assets rose by 2.5 per cent to reach Dh53.0 billion compared to Dh51.7 billion at 2023 year-end, up by 11.5 per cent from 31 March 2023.

Loans and advances and Islamic financing receivables rose by 2.2 per cent to reach Dh28.5 billion compared to Dh27.9 billion at 2023 year-end, up by 3.6 per cent from 31 March 2023.

Investments and Islamic instruments increased by 3.7 per cent to reach Dh8.4 billion compared to Dh8.1 billion at 2023 year-end, up by 18.0 per cent from 31 March 2023; optimising a portion of liquidity towards a high-quality investment book to augment value and return.

Return on average assets improved to 1.9 per cent, up from 1.3 per cent for the corresponding period in 2023.

Customer deposits and Islamic customer deposits increased by 2.5 per cent to reach Dh39.5 billion compared to Dh38.6 billion at 2023 year-end, up by 13.4 per cent from 31 March 2023. Current and Saving Accounts (CASA) deposits stood at 42.2 per cent 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 68.6 per cent (2023: 67.4 per cent) and eligible liquid assets ratio (ELAR) at 28.6 per cent (2023: 28.3 per cent), well ahead of Central Bank of the UAE’s minimum requirements.

Return on average equity improved to 15.3 per cent, up from 10.2 per cent for the corresponding period in 2023.

The capital adequacy ratio (CAR) stood at 18.9 per cent (Tier 1 ratio of 17.8 per cent and CET 1 ratio of 14.3 per cent) compared to 19.0 per cent (Tier 1 ratio of 17.8 per cent and CET 1 ratio of 14.2 per cent) 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 rapidly evolving global economy.

Dr. Raja Easa Al Gurg, NBF deputy chairperson said: “The first quarter of 2024 saw an impressive start for NBF delivering an outstanding set of results. This is particularly encouraging given the challenging global conditions, incessant inflationary pressures, climate change considerations and the on-going conflicts around the world. This strong financial performance reflects the recent years of hard work and the robustness of our balance sheet in a higher interest rate environment coupled with an exceptional improvement in asset quality indicators, solid capital adequacy, ample liquidity and success in harnessing cutting-edge technology.

“NBF has a good platform for growth with the opportunities that exist within the UAE and beyond; facilitated by our home country’s positive economic outlook, the sustained efforts put in to diversify in the non-hydrocarbon sectors and the strategic global partnerships undertaken to enhance UAE’s position as a global business hub. This was evidenced by the UAE achieving a 3.4 per cent GDP growth in 2023; with an expectation to grow by 5.3 per cent in 2024. With an unwavering commitment to long-term sustainable returns and customer care, we continue with our focus on capturing these growth opportunities, enhancing our earnings sustainability and targeting good returns in the coming quarters of 2024. NBF continues to build on its sustainability strategy to benefit from the evolving prospects that are arising in this space. We remain committed to supporting our customers and contributing to the growth and advancement of our communities enabling UAE’s fiscal and social development.”

• Business