The National Bank of Abu Dhabi (NBAD) earned AED 1,409 million for the quarter ended 31 March 2013, up 35.5% from AED 1,041 million in the corresponding quarter in 2012. This represents diluted EPS of AED 0.30 for Q1 2013 versus AED 0.21 for Q1 2012.

The growth in the quarter was due primarily to higher investment, fee and net interest income.

The annualised return on shareholders’ funds for the year was 19.9%, up from 17.2% in Q1 2012 and in line with our medium term target.

H.E. Nasser Alsowaidi, Chairman of NBAD said, “The Bank’s performance in the first quarter once again demonstrates our ability to deliver solid results in a challenging global environment. The continued strength of our balance sheet, capital position and liquidity is an example of our ongoing commitment to excellence.

Another example of our continuing commitment to excellence is our recent announcement that Alex Thursby will replace Michael Tomalin as our next Group Chief Executive. Alex has an impressive record of achievement in his global banking career, and we are excited for him to take the reins as NBAD embarks upon its next phase of growth.”

Mr. Michael Tomalin, Group Chief Executive, commented, “In the first quarter, we delivered top line growth of 24% whilst growing the bottom line by over 35%. This growth is a result of the diversified business model we have, and I expect this growth to continue in the years to come. I am proud of the Bank’s performance under my stewardship, and I am confident that Alex Thursby will succeed in his new role and lead the bank to even greater heights. I look forward to assisting Alex as he transitions to become the next Chief Executive at NBAD. Further, I am excited about the opportunity to continue to be a part of the Bank’s growth story as a member of the Board.”

OPERATING INCOME

Operating income increased by 23.7% to AED 2,510 million in Q1 2013, up from AED 2,030 million in the first quarter of 2012. Net interest income and net income from Islamic financing was AED 1,536 million in the quarter, increasing 5.3% over the corresponding period last year. Net fees and commissions grew by 8.9% to AED 414 million in Q1 compared to AED 380 million in the corresponding period in 2012. Overall, non-interest income grew strongly by 70.9% in the quarter to AED 974 million, driven primarily by net investment income of AED 264 million and other operating income of 163 million, reflecting a combination of strength in financial markets and successful hedging strategies.

Net interest margin declined to 1.97% in the quarter, lower than 2.14% for the corresponding period in 2012 as a result of increased liquidity deployed across highly liquid asset classes. The percentage lent (loans and advances to total assets) at 31 March, 2013 was 50% compared with 56% at the end of Q1 2012.

EXPENSES

Operating expenses for the quarter were AED 728 million, up 12.7% compared with the corresponding period in 2012, reflecting continued investments in our business and in line with expectations.

The cost to income ratio was 29.0% for the period under review, an improvement over the 31.8% recorded for Q1 2012 and well below the Group’s medium-term cap of 35%.

The Bank further extended its network, which is already among the largest in the UAE, to 124 branches and cash offices, 578 ATMs and 14 business banking centres. The Bank also continued to invest in other distribution channels such as e-banking and 24x7 call centres, enhancing customer service capabilities. Our global footprint currently consists of 19 countries.

Our investments in our franchise, network and systems, products and people are in line with our vision to be recognised as the World’s Best Arab Bank.

OPERATING PROFITS by BUSINESS SEGMENTS

Operating profits grew 28.8% to AED 1,783 million for the current quarter compared to AED 1,384 million recorded in Q1 2012. Operating profits grew by 16% to AED 260 million for our International businesses, grew by 83% for our Financial Markets Group and 73% for our Global Wealth businesses. Higher other operating income drove Head Office’s contribution higher by AED 154 million.

IMPAIRMENT CHARGES
Net impairment charges were AED 322 million, higher by 3.0% for the quarter as compared to the corresponding period in 2012. The increase in gross specific provisions of AED 60 million was neutralised by the increase of AED 49 million of recoveries and write-backs.

The Bank continues to be fully compliant with the Central Bank of UAE’s minimum requirement of 1.5% for collective provisions, well ahead of the effective date (year end 2014).

Non-performing loans increased to AED 5,961 million, representing 3.55% of the loan book and in line with our indications at the beginning of 2012 that non-performing loans should plateau at between 3.5% and 3.75%. Total provisions represented 94.8% of non-performing loans.

BALANCE SHEET

Total Assets were AED 322.0 billion as of 31 March 2013, up 11.3% versus 31 March 2012 and up 7.1% versus 31 December 2012.

Loans and advances to customers were AED 162.4 billion as of 31 March 2013. Loan growth was down 0.5% year-over-year for the Group and continues to be lower than anticipated.

Customer deposits were AED 205.6 billion, up 9.6% year-over-year. In the first quarter, deposits grew across the board, and we continued to see net inflows of government deposits.

Equity of AED 31.2 billion was higher by 15.1% versus 31 March 2012, consisting of shareholders’ funds of AED 27.2 billion and GoAD Tier-I capital notes of AED 4.0 billion.

The Bank repaid a further AED 1.5 billion of the original AED 5.6 billion Ministry of Finance (MoF) subordinated notes during the quarter and repaid the remaining AED 1.5 billion at the start of 2Q 2013. After this repayment in the second quarter, the Bank has fully repaid the MoF.

Basle-II ratios remain strong and well above the minimum 12% and 8% (Tier-I) required by the UAE Central Bank, with a capital adequacy ratio of 19.7% and a Tier-I ratio of 17.3% as of 31 March 2013.

GLOBAL BOND ISSUANCES

The Bank closed its inaugural Kangaroo bond with a coupon rate of 5% and face value of AU $300 million (US $308 Million; AED 1.131 Billion). The note was offered under NBAD’s AU $2 Billion Australian and New Zealand Debt Issuance Program.

The Bank also launched a 15-year Uridashi bond worth US $16.6 million (AED 60.1 million), which is the first of its kind from the Middle East and North Africa (MENA) region and allowed NBAD to directly access Japanese retail investors. This issue follows the first ever Samurai bond by a Middle Eastern financial institution which NBAD issued in 2011.

CREDIT RATINGS

NBAD’s long term ratings continue to remain amongst the strongest combined ratings of any financial institution in the MENA region with ratings from Moody’s Aa3, Standard & Poor’s (S&P) A+, Fitch AA-, RAM (Malaysia) AAA, R&I’s (Japan) rating of A+, and ranked among the World’s 50 Safest Banks by Global Finance.

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