First Gulf Bank, the third-largest lender in Abu Dhabi, made weak gains last year as low levels of lending hurt the company's bottom line.
Net profit for the fourth quarter was Dh865 million (US$235.5m), an increase of 1.1 per cent on the same period in 2009. Profit for the whole of last year was Dh3.42 billion, an increase of 3.3 per cent on the year before.
"Growth in profitability combined with strong balance sheet position and ratios remain the core of First Gulf Bank's financial model," said Andre al Sayegh, the chief executive of First Gulf Bank.
"Most important is First Gulf Bank's commitment to play a growing role in the UAE economy as it gathers momentum going forward. Our policy favours a prudent and gradual overseas expansion."
Deposits rose 6.9 per cent from the third quarter to Dh98.7bn, bringing the bank's loans-to-deposits ratio to 96.8 per cent, well within Central Bank limits intended to ensure the health of the UAE's financial system.
But this improvement has come at the cost of loan growth. Lending has barely budged since September, increasing 0.02 per cent to Dh95.6bn, although loans and advances were up 6 per cent on 2009.
Meanwhile, net interest income increased 11 per cent to Dh4.25bn in the past 12 months.
"Overall, the results look good," said Murad Ansari, a financial analyst at EFG-Hermes. "A 60 per cent payout is pretty nice."
Although loan growth was weak, the bank's balance sheet reflected a trend throughout the UAE's banking sector, Mr Ansari said.
"It was not a very strong quarter in terms of loan growth," he said. "That was more or less expected. This year was more about managing the existing balance sheet rather than growing it."
The bank's board intends to distribute a cash dividend of 60 fils a share and 5 per cent in free shares to existing shareholders, after a recent share buyback programme.
