National Bank of Fujairah PJSC (NBF) – 2022 Interim Results NBF’s nine months net profit surges 155.1%
Resilient performance supported by strong capital adequacy, sound improvement in asset quality and robust balance sheet management
NBF is pleased to announce its results today for the nine month period ended 30 September 2022.
Highlights:
- NBF recorded year-on-year growth of 155.1% to close the nine month period at a net profit of AED 230.7 million compared to AED 90.4 million in the corresponding period of 2021, up 463.4% for the three month period ended 30 September 2022 over the corresponding period of 2021. This demonstrates NBF’s enhanced focus on quality business, an efficient funding base, continued economic recovery and improving resilience despite the uncertain geopolitical environment.
- Underpinned by higher net interest income and net income from Islamic financing and investment activities, fee and exchange income, NBF posted an operating profit of AED 932.5 million for the nine month period, a rise of 25.1% compared to AED 745.4 million in the corresponding period of 2021 and up 2.4% quarter-on-quarter and 32.9% for the three month period ended 30 September 2022 over the corresponding period of 2021.
- Operating income growth of 28.1% was recorded for the three month period ended 30 September 2022 over the corresponding period of 2021; and 3.5% compared to Q2 2022. Operating income reached AED 1.32 billion for the nine month period ended 30 September 2022, up 21.7% compared to AED 1.1 billion in the corresponding period of 2021, reflecting the rising interest rate environment and improved fee income in line with the bank’s cautious recovery strategy.
- Net interest income and net income from Islamic financing and investment activities grew 20.6% to AED 855.4 million for the nine month period ended 30 September 2022 compared to AED 709.3 million in the corresponding period of 2021. It was up 39.6% for the three month period ended 30 September 2022 compared to the corresponding period of 2021; and up 19.1% compared to Q2 2022.
- Net fees, commission and other income rose 20.2% to AED 302.7 million for the nine month period ended 30 September 2022 compared to AED 251.8 million in the corresponding period of 2021. It was up 3.1% for the three month period ended 30 September 2022 compared to the corresponding period of 2021.
- NBF posted record foreign exchange and derivatives income of AED 142.5 million for the nine month period ended 30 September 2022, with an exceptional growth of 73.9% compared to AED 82.0 million in the corresponding period of 2021. It was up 45.9% for the three month period ended 30 September 2022 compared to the corresponding period of 2021.
- Income from investments and Islamic instruments stood at AED 19.2 million compared to AED 41.6 million in the corresponding period of 2021.
- Operating expenses increased by 14.2%, reflecting NBF’s investments in its businesses, systems, infrastructure and people. These investments include a set of digitalisation initiatives to enhance our focus on exceptional customer service through digital adoption and innovation. Nevertheless, NBF’s cost-to-income ratio improved to 29.4% compared to 31.3% in the corresponding period of 2021, after achieving further productivity improvements. This provides ample headroom to continue investing in our technological capabilities and enhancing customer experience.
- NBF maintained its policy of prudent and transparent recognition of problem accounts. The small number of exceptional group exposures that had been earmarked for resolution are progressing well in line with the bank’s recovery strategy. NBF secured net impairment provisions of AED 701.8 million for the nine month period ended 30 September 2022 compared to AED 654.9 million in the corresponding period of 2021. During the period, the bank’s impairment reserve reduced by 11.2% to AED 168.5 million compared to AED 189.7 million as at 31 December 2021. Total provision coverage ratio (including impairment reserves) improved to 113.4% compared to 87.0% as at 31 December 2021. The NPL ratio improved to 7.8% compared to 9.8% as at 31 December 2021 and IFRS 9 stage 2 exposure stood at 7.0% compared to 6.1% as at 31 December 2021. Excluding the few exceptional group exposures, the NPL ratio would reduce to 4.5% (31 December 2021: 5.5%).
- Loans and advances and Islamic financing receivables rose by 7.7% to reach AED 27.6 billion compared to AED 25.6 billion at 2021 year-end, up by 8.5% from 30 September 2021.
- Investments and Islamic instruments increased by 35.3% from AED 4.4 billion at 2021 year-end to AED 5.9 billion as at 30 September 2022, up by 29.2% from 30 September 2021 evidencing the deployment of a portion of excess liquidity towards the high quality investment book to augment shareholder value.
- The capital adequacy ratio (CAR) stood at 18.0% (Tier 1 ratio of 16.8% and CET 1 ratio of 13.1%) compared to 19.1% (Tier 1 ratio of 18.0% and CET 1 ratio of 13.8%) at 2021 year-end and is being maintained at this heightened level to support the bank’s ability to ride out any challenges arising out of the rapidly evolving operating landscape.
- Customer deposits and Islamic customer deposits rose by 1.6% to reach AED 32.7 billion compared to AED 32.2 billion at 2021 year-end, up by 10.7% from 30 September 2021. Current and Saving Accounts (CASA) deposits increased by AED 265.0 million from 2021 year-end, a 1.7% increase to AED 15.7 billion as at 30 September 2022 and up 16.7% from 30 September 2021. CASA deposits improved to a record 47.9% of total customer deposits as at 30 September 2022 softening the impact pertinent to the cost of deposits.
- Total assets rose by 3.3% to reach AED 44.4 billion compared to AED 42.9 billion at 2021 year-end, up by 8.9% from 30 September 2021.
- Ample liquidity has been maintained with lending to stable resources ratios at 78.8% (2021: 76.5%) and eligible liquid assets ratio (ELAR) at 16.0% (2021: 26.2%), well ahead of Central Bank of the UAE’s minimum requirements.
- Return on average assets improved to 0.7%, up from 0.3% for the corresponding period in 2021.
- Return on average equity improved to 5.4%, up from 2.1% for the corresponding period in 2021.
Dr. Raja Easa Al Gurg, Deputy Chairperson said:
“We are pleased with these encouraging set of results that exhibit the continued impact of our business and operational strategy, with positive revenue momentum and sound improvement in asset quality. Good growth across our operating and net performance is promising for the full year results and beyond, despite the on-going macroeconomic uncertainty.
Propelled by a strong upswing in business activities, buoyancy in the property sector and a rebounding hospitality sector in the wake of an easing of travel restrictions, the UAE consolidates its position to achieve its fastest annual economic growth in over a decade in 2022. Gaining from this positive market momentum, NBF is geared up and well placed to adapt its business growth.
The Group maintained a robust capital position and healthy balance sheet to confidently navigate the changing operating environment for enhanced long-term sustainable returns. We are delighted to see the growing market recognition during the quarter as well; where NBF secured the ‘Best Cyber Assurance and Resiliency Capabilities’ award at the Wealth and Investment Summit 2022 organised by MEA Finance. NBF will continue to maintain the highest standards of compliance and risk management practices commensurate with the new regulatory changes, digitalization initiatives and information and cyber security requirements.
Looking ahead, NBF will continue to tap new quality business opportunities keeping in view the booming oil sector which will drive the economic growth acceleration of the UAE in 2022; while a strong non-oil sector will add further impetus thanks to the government’s reforms programme. In addition, the bank is continuing to progress with a number of significant initiatives and is upholding enhanced focus on environmental, social and governance [ESG] activities which remain fundamental to the NBF franchise for a sustainable future.”
About National Bank of Fujairah PJSC:
Incorporated in 1982, National Bank of Fujairah PJSC (NBF) is a full services corporate bank with strong corporate and commercial banking, treasury and trade finance expertise as well as an expanding suite of personal banking options and Shari’ah compliant services. Leveraging its deep banking experience and market insight within Fujairah and the UAE, NBF is well-positioned to build lasting relationships with its clients and help them achieve their business goals.
NBF’s key shareholders include the Government of Fujairah, Easa Saleh Al Gurg LLC and Investment Corporation of Dubai. Rated Baa1 / Prime-2 for deposits and A3 for counterparty risk assessment by Moody’s and BBB / A-2 by Standard & Poor’s, both with a stable outlook, the bank is listed on the Abu Dhabi Securities Exchange under the symbol “NBF”. It has a branch network of 15 (of which 1 is an electronic banking service unit) across the UAE.
For further information, please contact:
Strategic Marketing and Communications Department
E-mail: CorpComm@nbf.ae
Telephone: +971 4 507 8351 and +971 4 507 8576