First Gulf Bank, FGB, has announced its financial results for the first nine months of 2014, showing a record net profit of AED 4,105 million, up 21% compared with the same period last year.
With total assets crossing the AED200 billion mark, FGB’s solid performance was driven by continued revenue momentum across businesses combined with expense rationalisation and risk discipline. During the third quarter of 2014, FGB achieved a record net profit of AED1,425 million, an increase of 6% from Q2 2014 and 20% from Q3 13.
During the third quarter of 2014, revenues increased by 13% to AED2,329 million. Net Interest and Islamic Financing income grew by 5% to AED1,596 million driven by strong lending momentum during the period partially off-setting the pressure on asset yields.
Non-Interest revenues recorded a strong 39% increase year-on-year to AED733 million as a direct result of higher core fee and commission income streams, investment and derivative income, property sales and positive contributions from subsidiaries.
Higher loan balances and efficient balance sheet management translated to a 11% year-on-year growth in Net Interest and Islamic Financing income to AED4,844 million. FGB’s Net Interest Margin for the 9M’14 period marginally reduced to 3.6% compared to last year’s level of 3.7%.
Non-Interest Revenues also showed a solid growth of 29%, thanks to higher volumes, increased strength of core banking fees, successful cross-selling across businesses and a higher contribution from subsidiaries. As a result, Non-Interest Revenues, which stood at AED2,024 Million, contributed 29% of total Group Revenues, compared with 27% for the same period last year.
Despite a 24% increase in operating expenses to AED1,528 million, FGB’s 9M’14 cost-to-income ratio remained contained and within target range at 22.2%, reflecting the bank’s highly efficient business model. The rise in expenses largely resulted from the bank’s various expansion plans, including the consolidation of Dubai First and Aseel Islamic Finance as well as continued investments in people, systems and marketing initiatives.
Capitalising on a favourable economic backdrop and strong market positioning, FGB was able to deliver healthy loan growth rates with Loans and Advances adding 4% during the quarter to reach AED132.7 billion. In light of the excess liquidity available in the U.A.E. banking system, FGB’s customer deposits continued to expand during the period,growing by 5% in Q3’ 2014 to AED144.6 billion.
The bank continued to diversify funding sources during the period with the issuance of medium term notes in Euro, Japanese Yen and Australian Dollars in July. Earlier this month, FGB issued a 5-year US$30 million (AED110 million) Euro Medium Term Note carrying a coupon of 3 months US$ Libor + 0.91%.
FGB’s Total Shareholders’ Equity amounted to AED32.4 Billion, up 9% compared to the same period last year. Capital Adequacy Ratio and Tier 1 capital remained robust at 19.5% and 18.2% respectively, against 19.0% and 17.7% as of June 2014. Earnings Per Share for the 9M’14 period increased by 22% year-on-year to AED1.01.
Abdulhamid Saeed, FGB’s Managing Director and Board Member, said, "FGB enjoyed another strong set of results during the period as we continue to deliver on our strategy to expand our business offerings in a manner that best serves our customers and that complements our operations. The consistent growth of our business and the strength of our franchise are playing an important role in accompanying the development of the U.A.E. economy and we continue to be committed and to take great pride in fulfilling this duty." -