National Bank of Abu Dhabi's profits soar, but the bank's chief executive, Michael Tomalin, expects bad debts to rise and lending remains tight.
Bumper end of year for NBAD as profits jump 71 per cent
National Bank of Abu Dhabi (NBAD) had a bumper end to last year, beating analysts' estimates for the year and curbing impairments. The country's biggest bank by market capitalisation said fourth-quarter earnings rose 71 per cent to Dh732 million (US$199.2m) over the same period in 2009. Net profits for the full year rose 21.9 per cent to Dh3.68 billion compared with 2009.
Michael Tomalin, NBAD's chief executive, said bad debts would continue to rise during the year. "2010 was not the easiest year for banking and we have continued to make substantial provisions for non-performing loans," he said.
However, the lender has tightened access to credit, with loans and advances falling 1.6 per cent from September to Dh136.8bn.
The lender reported a sharp decrease in impairments, which fell 14.3 per cent for the year compared with 2009, but bad debts nevertheless accounted for Dh1.2bn.
Operating profits improved throughout the year, driven by a 12.9 per cent increase in net interest income to Dh5.017bn compared with 2009.
NBAD also revealed its exposure to Egypt, which accounts for 7 per cent of the group's assets. "The bank has cross-border exposure on Egyptian entities of some $400m," the bank said in a statement. "We are committed to our people and customers and are monitoring the position on a daily basis."
"The top line was really strong," said Sofia el Boury, a financial analyst at Shuaa Capital.
"The bank has robust fundamentals and even if non-performing loans increase, the bank has enough of a cushion," she said.