The waiting pays off for First Gulf Bank's shareholders, after a massive Dh1.5bn dividend payment is announced for the year.
First Gulf Bank to pay shareholders Dh1.5bn
First Gulf Bank has announced a Dh1.5 billion (US$408.3 million) payout to shareholders as part of a dividend plan that includes issuing bonus shares to all investors.
The capital's third-biggest lender will pay shareholders Dh1 and distribute one extra share for every share they currently own, after reporting net profits of Dh3.7bn for last year. The result represents an increase of 8.3 per cent from a year earlier and is ahead of estimates.
"The payout was amazing," said Naveed Ahmed, a financial analyst at Global Investment House. "They're a bank that needed a trigger, since the bank's shares were underperforming last year."
Analysts said they had been underwhelmed by the performance of the bank's shares, which fell 16.4 per cent during the course of the year.
The cash dividend was the most important factor for investors, said Rami Sidani, the head of Middle East and North Africa at Schroders, an asset management company.
"The bonus shares is due to an accounting issue, but retail investors tend to appreciate it because it increases liquidity," he said.
The bank's shares total will double after the dividend is approved at the company's annual meeting, after which the stock's price will be adjusted to reflect the larger number of shares.
First Gulf Bank is committed to its dividend payout to retain its investor base, said Abdulhamid Saeed, the bank's managing director.
The lender has grown "through partaking in profitable investment opportunities while adhering to its sound risk management policies", he said. "As we continue to expand our operations, we remain committed to providing optimum returns to our shareholders and customers."
The bank has paid dividends constantly since 2000, he added, in an apparent swipe at other lenders that had halted dividend payments during the global financial crisis. Abu Dhabi Commercial Bank said last week it would resume dividend payments for the first time since 2008.
First Gulf Bank also reported quarterly profits of Dh1.02bn, an increase of 18.1 per cent from a year earlier.
The company's profits from its international operations in India, Qatar and Singapore grew threefold, rising to Dh109m from Dh37m in 2010.
During the year, First Gulf Bank terminated a management agreement of its Libyan operations, a joint venture with a Libyan government fund, following the outbreak of the country's revolution and civil war. A spokeswoman for the bank had previously said it had no exposure to UN sanctions against the Libyan government during the civil war.
The bank's net lending grew by 10 per cent to reach Dh104.7bn at the end of last month. Deposits increased 5 per cent to Dh103.5bn, leaving the bank's lending book almost completely covered by customers' deposits.
First Gulf Bank's largest shareholders include Mubadala Development, which is a strategic investment company owned by the Abu Dhabi Government, Al Nahda Investment, and members of the Abu Dhabi Royal Family.
The bank eased its restrictions against international investors during the quarter, lifting the cap on overseas buyers to 25 per cent of the bank's share capital, from an earlier limit of 15 per cent.