FGB profit at record as UAE bank earnings roll in

UAE lenders continue to report record profits in the first quarter amid economic renaissance.

UAE banks started to report first-quarter results in earnest yesterday, with the Abu Dhabi-based lender FGB leading the pack in rising earnings.

FGB, formerly known as First Gulf Bank, said its profit jumped 27 per cent as a booming economy has businesses and individuals rushing to banks to tap cheap financing.

FBG’s first quarter profit rose to a record Dh1.33 billion while earnings per share gained 32 per cent to 33 fils. Revenues gained 20 per cent to Dh2.25bn, while net interest and Islamic financing income advanced 17 per cent to Dh1.6bn, it said.

“Our financial results reconfirmed FGB’s ability to continuously generate higher and diversified streams of revenues year on year by allocating assets in an optimal manner,” said Andre Sayegh, FGB’s chief executive. “Non-interest revenues generated by our three pillar businesses – namely the wholesale group, consumer group as well as our treasury and global markets group – showed significant growth. FGB’s assets were well positioned to benefit from the continuous economic improvement in the UAE and elsewhere, which reflected positively on our profits.”

UAE bank profits, which rose to a record in 2013, have been bolstered by a turnaround in the economy. Last year the economy grew by more than 4 per cent, boosted by low interest rates, government spending on infrastructure and an influx of cash from other emerging markets that view the country as a safe haven. As a result, housing and stock prices have rebounded to pre-crisis levels.

In Dubai, Noor Bank, the Sharia-compliant lender formerly known as Noor Islamic Bank, also said its first quarter profit rose to a record as it rolled out a number of new products to meet increasing demand for Islamic financial instruments.

Net income rose to Dh85 million from Dh31m in the same period the previous year, the bank said. Return on equity improved to 14 per cent while its total assets grew 9 per cent to Dh25.2bn from Dh23.2bn at the start of the year. Total customer financing increased 14 per cent to Dh16.3bn, while customer deposits grew 11 per cent to Dh20.7bn, it said.

“Our solid first quarter results demonstrate the consistency of our earnings momentum driven by the business strategies which we implemented last year” said Hussain Al Qemzi, Noor Bank’s chief executive. “As we move through 2014, I remain optimistic about the opportunities ahead for both Noor Bank and the UAE, and believe the franchise is well capitalised and positioned for balanced and sustainable growth.”

As part of its innovation strategy, Noor Bank said it had successfully processed online commodity murabaha financing transactions for one of its significant small-business clients on the so-called Tradeflow platform at the Dubai Multi Commodities Centre. The platform, among other things, allows for greater Sharia compliance, it said.

National Bank of Fujairah said net profit rose 27 per cent to Dh115.3m compared with Dh90.7m in the corresponding period of last year. The loans and advances it made increased 24 per cent to Dh15.5bn from Dh14.3bn at the end of March last year.

Follow us on Twitter @Ind_Insights