FGB Q1 earnings up 7%

Bank’s revenues in January-March quarter marginally up by 3%

By Staff Report

Published: Fri 24 Apr 2015, 12:38 AM

Last updated: Thu 25 Jun 2015, 11:43 PM

Abu Dhabi - First Gulf Bank, or FGB, on Wednesday said its year-on-year net earnings in first quarter of 2015 grew seven per cent to Dh1.417 billion, but missed estimates.

Five analysts polled by Reuters forecast an average net profit of Dh1.51 billion for the January-March 2015 quarter.

The third-largest lender by assets in the UAE said its quarter-to-quarter earnings dropped by eight per cent to Dh1.33 billion from Dh1.55 billion in the quarter ended December 31, 2014.

The Abu Dhabi-based lender said revenues in January-March 2015 quarter were marginally up by three per cent to Dh2.322 billion compared to same period last year.

Abdulhamid Saeed, managing director of FGB said: “We are continuing to leverage on the strengths of our business model to record consistent growth in assets and profitability.”

Net Interest and Islamic financing income dropped one per cent to Dh1.587 million due to the prevailing surplus liquidity and sustained competition in the UAE banking system, which are driving asset yields down.

The bank’s net interest margins stood at 3.4 per cent in the quarter from 3.7 per cent over the same period last year. However, this was largely offset by the continued strength of non-interest income streams which expanded by 13 per cent to Dh735 million driven by strong contributions from fee-based revenue sources generated by the three major core banking business groups, as well as the various subsidiaries of the group. Reflecting a successful revenue diversification strategy, the contribution of non-interest revenues to total operating income grew to 32 per cent year-on-year basis.

Subsidiaries and associates including Dubai First and Aseel Islamic Finance generated 13 per cent of FGB’s total revenues. The bank’s year-on-year lending grew 16 per cent to Dh142.8 billion while customer deposits increased by 10 per cent to Dh142.9 billion. Total assets reached at Dh214.0 billion in the period. “After a record 2014, we are starting 2015 with confidence thanks to an efficient business set-up which has allowed us to pursue our growth momentum while capitalising on a strong and defensive balance sheet to weather both industry and macro challenges,” André Sayegh, chief executive of FGB, said.

In his outlook for 2015, he showed confidence in FGB’ business model in low oil prices scenario.

Sayegh said his bank will continue to yield consistent growth in revenues and profitability. “This is what we have been striving towards and achieving for the past 15 years, and 2015 will be no exception.”

FGB’s revenue model is gradually shifting, whereby non-interest income continued to grow, reaching 32 per cent of total revenues against 29 per cent last year, which is a “great achievement” in line with our plans to diversify revenue sources, he said. After prepaying a $900 million syndicated loan in January which was due to mature in December 2015, the bank successfully issued a five-year Dh2.74 billion EMTN at a coupon of 2.625 per cent on 24 February 2015. Subsequent to March-end 2015 and in line with its funding diversification strategy across international markets, FGB completed its inaugural three-year Dh236 million Formosa bond earlier this month, at a coupon rate of five per cent. -haseeb@khaleejtimes.com

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