First Gulf Bank PJSC : First Gulf Bank achieves solid performance with Q3'2013 Net Profit up 12.8% to AED 1,190Mn; 9 Months Net Profit up 13.2% to AED 3,402Mn

• Q3'2013 Net Profit at AED 1,190Mn, 12.8% higher than AED 1,054Mn in Q3'2012
• Nine Months 2013 Net Profit at AED 3,402Mn, 13.2% higher than AED 3,006Mn in Nine Months 2012
• Total Assets of AED 189.6Bn, up by 8.3% from year-end 2012
• Customer Deposits at AED 132.6Bn and Net Loans and Advances at AED 126.9Bn, up by 11.1% and 10.7% respectively from year-end 2012
• Q3'2013 Operating Income at AED 2,052Mn up by 13.3% from AED 1,812Mn in Q3'2012
• Key Ratios: Loan to Deposit Ratio at 95.7%, Cost to Income Ratio at 20.7%, Net Interest Margin at 3.68% and Capital Adequacy Ratio at 19.3%.
• Nine Months 2013 Return on Average Equity (RoAE) improved to 15.3%; Return on Average Assets (RoAA) maintained at a strong 2.5%

First Gulf Bank, (FGB), continues to deliver solid performance with Q3'2013 Net Profit at AED 1,190Mn, 12.8% higher than the same period last year (Q3'2012). This sets the net profit figure for the first nine months of 2013 at AED 3,402Mn, 13.2% higher than the same period last year.

Commenting on FGB's outstanding performance, André Sayegh, CEO of FGB, said: "During the third quarter, FGB continued to witness notable growth in its core businesses, confirming its strategy to primarily develop its business based on solid organic growth both domestically and internationally. This, complemented with effective balance sheet management and risk mitigation, allowed FGB to continue delivering robust performance despite an increasingly competitive operating environment."

In terms of acquisitions, FGB increased its stakes in Aseel Islamic Finance, through a purchase agreement which has raised the bank's ownership from 40% to 100%. With a paid-up capital of AED 800 million, Aseel is now FGB's Islamic banking and finance arm, offering innovative Shariah-compliant solutions for our customers."

Sayegh added: "Besides increasing our stake in Aseel, we are reshaping and upgrading our Consumer Banking Group, our Wholesale Banking Group as well as our Treasury and Investment Banking activities, positioning FGB to take its success story to the next level over the coming periods."

First Gulf Bank was also recognised for its outstanding financial performance and high quality services and products at the Gulf Business Industry Awards 2013. FGB received two titles, both within the Banking category: 'Company of the Year' for the bank and 'CEO of the Year' in recognition of the bank's CEO, André Sayegh.

Q3'2013 Income Statement Highlights

FGB recorded Q3'2013 Net Profits of AED 1,190Mn, up 12.8% compared with AED 1,054Mn the same period last year.

Operating Income increased by 13.3% to AED 2,052Mn. Net Interest and Islamic Financing Income stood at AED 1,525Mn in Q3'2013, up 8.6% Year-on-Year. This was achieved on the back of improving Net Interest Margins to 3.68%, from 3.62% as of June-end 2013 and 3.58% in March 2013. In addition, positive market conditions allowed the bank to generate higher property income and stronger investment returns during the period.

Total Assets increased to AED 189.6Bn, up by 8.3% compared with AED 175.0Bn at year- end 2012. Customer Deposits expanded to AED 132.6Bn, which is 7.0% higher than Q2'2013 (AED 123.9Bn) and 11.1% higher than year-end 2012. On the lending side, Net Loans and Advances grew by 3.1% during the quarter to AED 126.9Bn. This translated into a 10.7% Year-to-Date growth hence exceeding the initial target of 10% loan book growth for the full year 2013.

Performance for the First Nine Months of 2013

Continuing to maintain its leading position in the market, FGB scored a Net Profit of AED 3,402Mn for the first nine months of 2013, 13.2% higher than AED 3,006Mn reported during the same period last year.

Operating Income was achieved at AED 5,945Mn, marking a 13.0% increase from AED 5,263Mn last year on the back of strong balance sheet growth, sustained margins and enhanced revenue streams across all business lines.

During the first nine months of the year, Wholesale Banking (including International Operations) contributed 41% to the group's revenue, Consumer Banking contributed 42% and Treasury and Investments contributed 13%. The remaining 4% were provided by the Subsidiaries and Associate Companies of the group.

Efficient expense management helped to maintain cost-to-income ratio at a highly competitive level of 20.7% for the first nine months of 2013 against 19.5% the same period last year.

Return on Equity improved to 15.3% compared with 14.6% during the first nine months of 2012, while Return on Average Assets remained stable at a solid 2.5% which is already one of the highest levels amongst local and regional peers.

Abdulhamid Saeed, FGB Managing Director and Board Member, commented: "FGB delivered a strong set of results over the first nine months of the year. Currently, the bank is undergoing key changes as part of our organic growth strategy. Not only are we going to reinforce our global presence, with a focus on Asia, but we are also enhancing our operations in our existing divisions and groups. Of course, we are a local bank, and our strategy will always be focused on meeting the needs of UAE residents and on supporting Emiratis."

Balance Sheet - Liquidity

During Q3'2013, FGB benefited from favourable market conditions as the UAE banking sector enjoys ample liquidity. As a result, the Bank's Customer Deposits witnessed a strong increase of 7.0% to AED 132.6Bn as of September-end 2013, that is a AED 8.7Bn net quarterly addition. As a result, absolute Loans-to-Deposits ratio improved to 95.7% from 99.4% in Q2'2013, while regulatory Advances-to-Deposits Ratio remained well below the Central Bank cap at 80% against 83% at the end of the previous quarter. In addition, liquid assets ratio improved to 18.2% during the period from 16.9% in Q2'13.

Capitalisation and Earnings per Share

By the end of Q3'2013, Total Shareholders' Equity stood at AED 29.8Bn and Capital Adequacy Ratio at 19.3%. The Earnings per Share for the first nine months of 2013 was AED 1.08, a 14.8% increase from AED 0.94 for the same period in 2012.

Saeed stated: "At FGB, we recognise that our shareholders are significant contributors to our success story and we appreciate their support and confidence in their bank. We are committed to our shareholders and to showing them our appreciation by giving value back to them. FGB is known for consistently delivering superior returns and we are committed to continue on doing so as we move forward with expanding our operations."

Asset quality and Provisioning

FGB's NPL to Gross Loan Ratio landed at 3.9% as of September-end 2013, compared with 3.6% the previous quarter. Full consolidation of Aseel Finance during the period as well as minor downgrades in the corporate portfolio, are the main reasons behind this slight increase. Provision Coverage stood at 75%.

"We are satisfied with the asset quality metrics displayed as of September 2013. We have maintained our NPL ratio within our guidance of 3% to 4% and as the economy is picking up momentum, we expect overall credit quality to improve over the coming quarters", said Sayegh.

He concluded: "FGB is moving forward with its expansion and growth plans as witnessed on ground. Services were enhanced, new technical hires were made, and we are firmly moving into the Islamic Finance sector with the full consolidation of Aseel Islamic Finance. It is an exciting time for us as a bank as we look forward to the many activities that we still have ahead of us. Sticking to our customer-centric approach, FGB will continue to successfully implement its strategic plans including the upcoming consolidation of Dubai First over the next few months. The bank is working effortlessly towards best serving customer needs by expanding into new avenues aimed at delivering sustainable growth and maximizing shareholders' value."

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