NBAD reports lower than estimated earnings for 2011, frustrating expectations furthered by improved profits and high dividend payouts at rival lenders in the capital.
National Bank of Abu Dhabi sets slow pace
National Bank of Abu Dhabi (NBAD) posted a marginal increase in full-year profit that was sweetened by a bumper dividend payout to investors.
The capital's biggest bank reported net income of Dh3.7 billion (US$1bn), an increase of 0.6 per cent on the previous year. Analysts had hoped for profits of Dh3.85bn.
"Overall, not a particularly positive set of results in our opinion," said Raj Madha, a financial analyst at Rasmala Investment Bank.
The small increase in profit comes as many of the UAE's biggest banks report strongly improved earnings for the year and large dividend payouts.
Last week, Abu Dhabi Commercial Bank (ADCB) said it would resume dividend payments, halted since 2008, while First Gulf Bank said this week it would pay Dh1.5bn in cash to investors while doubling their holdings with an issue of bonus shares.
NBAD announced a 30 per cent cash dividend and a 30 per cent distribution of bonus shares, representing a higher payout than ADCB.
However, NBAD's performance was "disappointing when it came to loan growth", Mr Madha said. "They did have a strong third quarter, but total lending was at the bottom end of expectations."
NBAD's loan book increased 16.5 per cent during the year to Dh159.5bn, while deposits grew by 23.2 per cent to Dh151.8bn.
The bank reported a 9.7 per cent increase in operating income to Dh7.8bn for the year, but expenses also rose 17.2 per cent during the same period.
The bank's impairments, including for bad debts, increased 24.1 per cent to Dh1.4bn.
NBAD had been particularly cautious on its provisions for properties earmarked for expansion and its loan book alike, said Michael Tomalin, the bank's chief executive.
"Despite these higher provisions, net earnings have remained steady; a good achievement in a year when many of our global peers have seen sharp falls in their income."
Attention now turns to Emirates NBD, due to report on February 15.