National Bank of Abu Dhabi's earnings leapt by more than a third during the first quarter of the year as projects resumed.
National Bank of Abu Dhabi profit rises 35% in first quarter
National Bank of Abu Dhabi's earnings leapt by more than a third during the first quarter of the year as construction projects in the emirate resumed and the bank booked gains on market investments.
The biggest bank by assets and market value in the capital reported a 35.5 per cent increase in net profits for the first quarter to Dh1.4 billion compared with the same period a year earlier, beating analysts' estimates of Dh1.1bn.
The boost in profits was driven by a lower cost of funds and an improved performance from the bank's investment portfolio, although total lending fell by 1.3 per cent to Dh162.4bn.
"Overall revenues for Q1 2013 at Dh2.51bn came 13 per cent over estimates on much higher than expected investment and other income," wrote Naresh Bilandani, a financial analyst at JPMorgan, in a note to clients.
It is "quite likely this strength on bottom line will maintain the price momentum in NBAD shares that are up circa 19 per cent year-to-date and have outperformed MSCI Frontier index by circa 11 per cent," he added.
"NBAD posted an amazing set of results for Q1 2013, posting the highest quarterly profit in its history," said Naveed Ahmed, a financial analyst at Kuwait's Global Investment House.
But he sounded a note of caution over the sustainability of the results, saying they may reflect excess liquidity from government deposits.
NBAD had grown its profits much faster than its top-line income, said Michael Tomalin, the bank's departing chief executive, who is scheduled to be replaced by ANZ's Alex Thursby in July.
"This growth is a result of the diversified business model we have, and I expect this growth to continue in the years to come," he said. "I am proud of the bank's performance under my stewardship, and I am confident that Alex Thursby will succeed in his new role and lead the bank to even greater heights.
"I look forward to assisting Alex as he transitions to become the next chief executive at NBAD."
The bank is in the midst of a huge international expansion, which it hopes will help it to increase its total size to about Dh1 trillion in assets and quadruple its annual profits to Dh16bn by 2021, the bank said in a presentation at its shareholder meeting last year.
National Bank of Fujairah also reported a sharp increase in profits, generating net income of Dh90.6 million, a 40.7 per cent increase compared with the corresponding period a year earlier.
Abu Dhabi's bank shares are the best sector performer in the UAE of the year, chalking up a 28 per cent gain year-to-date.
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