Bumper UAE bank dividends may be on the way

A bumper year for UAE banks in 2013 as the economy flourished may lead to dividend bonanza for shareholders.

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UAE bank shareholders are set to reap bumper dividends after the country’s biggest banks added billions of dirhams in fourth-quarter profits.

A slew of double-digit earnings increases from the UAE’s largest lenders has capped a year defined by rebounding consumer confidence, rising spending and surging property prices.

The Abu Dhabi-based lender First Gulf Bank said yesterday it planned to distribute a 100 per cent dividend, which translates to Dh1 a share, after its profit gained 15 per cent in 2013.

Dubai Islamic Bank, the country’s biggest Sharia-compliant lender, said that it would pay out a 25 fils per share dividend after its profit soared 42 per cent, the biggest gain of banks that have reported full-year earnings so far.

Both payouts are subject to shareholder and Central Bank approval.

First Gulf Bank reported a record net income of Dh4.77 billion in 2013 from Dh4.15 bn in 2012. Its dividend payout this year is up 20 per cent from last year’s 83 fils per share dividend, the bank said.

“While there is no doubt that the economic environment is improving, both in the domestic market and overseas, our continued focus remains primarily on balance sheet optimisation,’’ said Andre Sayegh, First Gulf’s chief executive. “In fact, we manage ratios with the objective of achieving best asset allocation while maintaining a strong liquidity position and strong capital base.”

Meanwhile, Dubai Islamic Bank said its full-year profit in 2013 was boosted by a rise in business activity and a decline in bad loans. Net income rose to Dh1.72bn from Dh1.21bn in 2012, the lender said.

The bank’s non-performing loan ratio declined to 11.1 per cent in 2013 from 12.9 per cent the previous year, it said. Customer deposits rose 18.6 per cent to Dh79.1bn at the end of 2013 from Dh66.7bn the previous year, it said.

“On the back of improved market conditions and focused strategy over the past few years, DIB has posted a strong performance in 2013 with solid financial results,” said Mohamed Ibrahim Al Shaibani, the chairman.

“The recent Expo 2020 win will provide a significant economic boost to all sectors across Dubai and the UAE and given the recent results, DIB is better positioned than ever to take advantage of the current positive market trends.”

Elsewhere, National Bank of Ras Al Khaimah, also known as RAKBank said its net income in 2013 was Dh1.43 billion, without giving a comparative figure for the previous year.

It said its income was bolstered after the lender’s Islamic finance division broke even ahead of target after its first year. RAKBank said its directors had recommended a cash dividend of 50 fils per share.

“We have seen solid growth in the balance sheet for most of the bank’s business lines,” said Peter England, RAKBank’s chief executive. “Fee income also grew very strongly for the year and costs were contained, further reducing our cost income ratio, all of which are very positive signs for the future.”

Net interest income and income from Islamic financing grew 5.5 per cent while loans and advances gained 8.5 per cent to Dh22.4bn, of which Dh1.2bn came from Islamic financing assets, RAKBank said. Non-interest income rose 20 per cent to Dh793.4 million thanks to a large contribution from investments, the bank added