ABU DHABI — Net profits of National Bank of Abu Dhabi (NBAD) plunged 18.4 per cent as earnings for the year 2006 reduced to Dh2.1 billion against Dh2.58 billion in 2005.
Speaking at a Press briefing yesterday, Michael H Tomalin, CEO, NBAD, said the nation's fourth largest bank's equity business boosted the profits in 2005. The results for 2005 was exceptional which could not be sustained in 2006.
The return of equity was as high as 44 per cent in 2005 which slid to 29 per cent in 2006. He said that if any correction hits the booming real estate market, NBAD's profits would not be affected significantly.
Tomalin added that the bank was expecting modest but positive growth in 2007. The bank in 2006 managed to earn only Dh216 million compared to Dh1.02 billion in 2005.
The earning per share (EPS) of the bank declined to Dh1.72 in 2006 as against Dh2.11 in 2005. The NBAD board of directors has recommended a cash dividend of 40 fils per share and a stock dividend of 30 per cent subject to shareholders' approval which is to be taken at its AGM on March 12.
The bank's operating income dropped by 13.35 per cent in 2006 to Dh2.95 billion compared to Dh3.41 billion in 2005.
The total assets of the bank exceeded the Dh100 billion mark at the end of 2006, up 19 per cent from year end 2005, with deposits up 19 per cent to touch Dh71 billion and loans up 12 per cent at Dh58 billion. The net return on average shareholder's equity reached 27.3 per cent in 2006, lower than the record 43.9 per cent in 2005. NBAD operating profits
from domestic banking business increased four per cent and represented 56 per cent of the group profit.
The investment banking profits which represented 19 per cent of the group profit, were down 64 per cent over the year due to weak local and less active equity markets which affected asset management and brokerage fee business.
Profits from the international banking business increased 31 per cent and represented 18 per cent of the group profit.
EXPANSION: Commenting on the bank's future plans, the NBAD CEO said that subject to final regulatory approval, the bank would set up an Islamic finance company with a capital of Dh 200 million to provide Islamic product and services. The bank is also setting up a private banking arm to be based in Switzerland with a capital of Swiss franc 100 million.
He said that NBAD was also planning to open two more branches in Kuwait in 2007 to the already existing one branch opened last year, and another two more in Sudan.
"NBAD has put up an application to open a branch in Qatar, and has a license to open a full branch in Bahrain by July 2007. The bank has 20 branches in Egypt and 65 in the UAE plans to add 25 more branches in the country," he added.
He hoped two fully owned Islamic and Swiss subsidiaries would be operational in the second half of 2007.