National Bank of Abu Dhabi net profits up 9% to Dhs4.733bn in 2013

January 29, 2014 7:34 am

National Bank of Abu Dhabi (NBAD) earned Dhs4.733bn for the financial year ended 31 December 2013, up 9.3% from Dhs4.332bn in the previous financial year 2012 primarily driven by higher net interest income and fee income. This represents diluted EPS of Dhs1.04 for FY 2013 versus Dhs0.95 for FY 2012.

Net profits were up 4.0% to Dhs1.077bn in Q4 2013 versus Dhs1.035bn in Q3 2013, but were down by 3.9% as compared to Q4 2012.

The annualised return on average equity for FY 2013 was 14.4%, down from 15.1% in FY 2012.

H.E. Nasser Alsowaidi, Chairman of NBAD, said, “In 2013, NBAD once again delivered solid results. We delivered strong revenue and earnings growth whilst maintaining our solid balance sheet and strong capital position. Notably, the Bank was awarded the prestigious Sheikh Khalifa Excellence Award – Diamond Category in 2013, an award which confirms NBAD’s position as a leader in the financial industry.”

Mr. Alex Thursby, Group Chief Executive, said, “Our results in 2013 were solid, and we are beginning to see momentum increase as we execute against our 5-year strategic plan. We have laid out a new mission to be ‘core to our chosen customers’, and we are now focused on capitalising on our unique positioning at the heart of the ‘West-East Corridor’. During the year, we won many prestigious awards and were upgraded to AA- from A+ by S&P, a notable event as we are now one of 20 commercial banking groups globally to be rated AA- or equivalent by all three major rating agencies.”

“We are well positioned to continue the momentum we have begun to see as we enter 2014. The restructuring of our organisation has commenced and we are investing in our new strategy and building the operational ‘spine’ of the Bank. Our focus is on building new drivers of non-interest income and our results are beginning to show strong improvements in underlying revenue performance. As a result of the reorganisation and investments in building the spine, there were some planned 1-time expenses in the 4th quarter which will not repeat. Going forward, our strategy is to grow our Wholesale, Wealth and Retail & Commercial businesses with concurrent growth in CASA as we expect continued margin pressure.”

“I am confident that we will continue to successfully execute against our strategy, and I am excited by the prospects for NBAD in the coming years,” Mr. Thursby concluded.

Economic Overview

Global economic activity grew approximately 3% in 2013, down from around 3.3% in 2012 as advanced economies contributed less than emerging markets. Entering 2014, there are several trends which are favorable for the near-term economic outlook including easy monetary policy, record low interest rates and stimulus by major central banks.

The UAE, which has the 2nd largest economy in the Arab world and 29th largest GDP in the world, will become part of the MSCI Emerging Market Index in May 2014, and has continued to benefit from its safe haven status during periods of instability in the region. The economy has shown signs of resilience amidst global and regional uncertainty and is beginning to generate returns from its diversification efforts. In 2013, the non-oil sector constituted nearly 60% of nominal GDP, with strength coming from a recovery in real estate, trade and tourism.

Operating Income

Net interest income (including income from Islamic financing) was higher by 6.8% in 2013 versus 2012, due primarily to lower funding costs and slightly higher interest income, partially offset by compressed margins. Net interest margin for 2013 on an average total assets basis was 2.08%, down from 2.19% in 2012, driven by increased competition resulting from abundant liquidity as well as re-pricing of risk as the economy recovers.

Net fees and commissions, a key focus area for the bank, continued to be strong throughout the year and were up 13.9% sequentially (4Q vs 3Q 2013) and 20.0% in 2013 versus 2012. Other operating income was over Dhs300m in both 2012 and 2013, driven primarily by exceptional gains from hedging strategies which are not expected to repeat in 2014.


Operating expenses for the quarter were Dhs916m, up 14.3% sequentially and higher by 15.9% on the previous corresponding quarter in 2012. Overall, the increase in expenses for 2013 was 12.9% over 2012 reflecting continued investments in our business and in line with expectations. Some of the expenses in the fourth quarter were 1-time in nature and resulted from the Bank’s restructuring activities.

The cost to income ratio was 34.5% for 2013, higher than 33.1% recorded for 2012.

The Bank further extended its network to 126 branches and cash offices, 588 ATMs and 8 commercial banking centres. The Bank also continued to invest in other distribution channels such as e-banking and 24×7 call centres, enhancing customer service capabilities. Our global footprint currently consists of 17 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 and our mission to be ‘core to our chosen customers’.

Operating Profits

Operating profits grew 6.2% to Dhs6.159bn in 2013 versus 2012. Operating profits by segment were Dhs4.076bn (66%) in Global Wholesale Banking, Dhs507m (8%) in Global Wealth and Dhs1.632bn (27%) in Global Retail and Commercial. Head Office, where central costs are held, had a net contribution of negative Dhs57m (-1%).

Organisational Structure

As part of its new strategy, the Bank introduced a new, more simplified organisational structure which went into effect in the second half of 2013. The structural reorganisation of businesses has now been completed, while streamlining of resources and business processes is ongoing.

Impairment Charges

Net impairment charges were Dhs285m in 4Q 2013, down 4.7% versus 3Q 2013 and 22.1% versus 4Q 2012. As a result of improving asset quality and recovery in collateral values, net charges for the full year were lower by Dhs131m or 9.8% to Dhs1.206bn. Specific provision charges were lower by Dhs419m offset by increase in collective provision charges by Dhs255m on growth in credit risk-weighted assets.

The Bank continues to be fully compliant with the Central Bank of UAE’s minimum requirement of 1.5% for collective provisions since the end of 2011 and ahead of the effective date (year end 2014).

Non-performing loans decreased by Dhs250m to Dhs6.013bn in 4Q 2013 from 3Q 2013. For the full year 2013, the net increase was Dhs232m. As of 31 December 2013, NPL ratio stood at 3.16% of the loan book and has gradually come down from a recent high of 3.55% recorded in 1Q 2013. Total provisions represented 105.2% of non-performing loans.

Balance Sheet

Asset growth of 11.4% to Dhs325.1bn in 2013 was primarily led by lending growth and increased liquidity.

Net Loans and advances grew 0.7% sequentially and 11.7% for the full year to Dhs183.8bn, driven by loan growth across domestic and international businesses.

Customer deposits grew by 10.9% in 2013 to end the year at Dhs211.1bn. There was an outflow of government deposits in 4Q, reversing the buildup of deposits in the first 3 quarters of 2013. Notwithstanding the outflow in 4Q, the Bank has experienced a strong and encouraging buildup of CASA (Current accounts and savings deposits) with growth of 13% in 4Q and overall growth of 30% in 2013.

Equity, consisting of shareholders’ funds of Dhs30.7bn and GoAD Tier-I capital notes of Dhs4.0bn, grew by 11.4% to Dhs34.7bn at the end of 2013.

Basle-II ratios, in accordance with UAE Central Bank’s framework, remain strong and well above the minimum 12% and 8% (Tier-I) as required by the UAE Central Bank, with a capital adequacy ratio of 18.2% and a Tier-I ratio of 16.5% as of 31 December 2013.

Credit Ratings

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

Accolades & Recent Development

• The National Bank of Abu Dhabi (NBAD) has been named the “Safest Bank in the Emerging Markets” by Global Finance, the renowned international financial magazine. Global Finance based its ranking by evaluating long-term credit ratings from Fitch Ratings, Moody’s, and Standard & Poor’s; and the total assets of the 500 largest banks in the emerging markets.

• The National Bank of Abu Dhabi (NBAD) has teamed up with INSEAD to launch Jauan Al Dhaheri Scholarship, the leading international business school, to allow one NBAD staff member the opportunity to study towards achieving INSEAD’s prestigious Global Executive MBA, each year. Named after the late Dr. Jauan Salem Al Dhaheri, who was NBAD’s Deputy Chairman, the scholarship is part of NBAD’s Emiratisation strategy aiming to attract, retain, and develop the best qualified UAE nationals.

• The National Bank of Abu Dhabi (NBAD) has for the second year running been voted the Best Private Bank in the UAE by judges at The Banker & Professional Wealth Management Magazine at the 5th Annual Global Private Banking Awards. The Global Private Banking Awards recognise and reward excellence in private banks from the Americas, Europe, Middle East and Asia according to qualitative and quantitative criteria.

• The National Bank of Abu Dhabi (NBAD) was awarded “Leading Corporate for Investor Relations – UAE” by the Middle East Investor Relations Society (ME-IRS).

NBAD took the top prize, which was awarded based on a survey of investors and analysts from around the globe. The survey was undertaken by Thomson Reuters Extel in partnership with the ME-IRS.

• The National Bank of Abu Dhabi (NBAD), the Number One Bank in the UAE, has won two awards: the UAE Best Branch Performance and Best Customer Service Initiative. NBAD received the Best Branch Performance from Ethos Consulting; and International Customer Service Institute named NBAD Best Customer Service Initiative for its NBAD Service Ambassadors.

• The National Bank of Abu Dhabi’s NBAD Sukuk Income Fund has been named the Best Sukuk Fund by Islamic Business & Finance Awards CPI Financials. The Sukuk Income Fund (SIF) was voted the best by the readers of CPI financials.


The Board of Directors has recommended a cash dividend of 40% (or 40 fils per share) and a stock dividend of 10% (1 bonus share for every 10 shares held) for the financial year ended 31 December 2013 subject to approval by the shareholders at the Annual General Meeting and the UAE Central Bank.

For investor relations enquiries, please contact

Michael Miller
Head of Investor Relations
National Bank of Abu Dhabi (NBAD)
Tel: +971-2-6112355

Abhishek Kumat
Investor Relations
National Bank of Abu Dhabi (NBAD)
Tel: +971-2-6111334

For media enquiries, please contact:

Ehab Khairi
Senior Manager, Media & PR – VP, Corporate Communication
National Bank of Abu Dhabi (NBAD)
Tel: +97126111190