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Index
A. Analysis report by each bank ………………….… 2
1. ADCB …………………..……………… 2
I. Background 3
A. Market share ------------------------------------------ 3
B. Shareholders ------------------------------------------ 4
II. Banking Environment in UAE ------------------------------ 4
A. Outlook
III. Financial Highlights ------------------------------------------ 5
I. Audit opinion ------------------------------------------ 5
II. Most important figures and Basic ratios ----------- 6
2. Financial Analysis ------------------------------------------- 7
I. Asset Quality ------------------------------------------ 7
II. Capital Adequacy ------------------------------------ 7
III. Liquidity ---------------------------------------------- 8
IV. Profitability ------------------------------------------ 8
3. Management ------------------------------------------------- 11
4. Swot Analysis ----------------------------------------------- 11
5. Recommendation ------------------------------------------- 12
I.
6. Emirates NBD …………...……………... 10
7. UNB ……………..……………………. 16
B. Consolidated analysis ……………..……………. 20
C. Bibliography …………………………………….. 23
D. Appendix …………………………………….….. 25
2. 2 | P a g e
ADCB
A. Background
Abu Dhabi Commercial bank was formed in July 1985 as a public shareholding company (Limited liabilities)
for an endless duration. ADCB is registered under the UAE Federal Commercial Companies Law No. (8) Of
1984 registration number 4 and operates in the UAE under license issued by the Central Bank of the UAE.
The establishment was done on a merger basis of Emirates commercial bank and Federal commercial bank
with Khaleej commercial bank (Established on 1975)
The bank is UAE-based provides wide retail banking, Corporate Banking, wealth management, commercial
Banking, private banking, corporate finance, investment banking, cash management, foreign exchange,
derivative, interest rate, currency and Islamic products, property management and project finance through
its network of 50 branches and 3 pay offices in the United Arab Emirates, 2 branches in India and One in the
UK with a teamof over 5000 staff.
Due to the decline in ADCB performance in the First decade of this millennium, they decided to replace the
core banking system as a key for development strategy. The core banking system was a crucial part of the
turnaround, which facilitated many modern banking products.
As a result of the new system (Oracle FSS) ADCB developed a considerable improvement in CASA and large
number of ATMs along with an advanced mobile and web banking products.
On the top of that ADCB seen a direct reflection on the profit YOY, in 2003, it had profits of around $100
million; in 2005, this figure was $500 million; and in 2010, it reached $1 billion. (Awards and recognition,
2014)
Market share:
Market share is an indicator to the bank size which can be calculated by dividing total sale of the bank over
the industry’s sales in a specific period.
As reported by ZAWAYA, the second quarter of 2014 is as follows for UAE banks:
(Table 1)
Generally speaking large banks create bigger possibilities for systemic risk compared to small ones, especially
if they are not meeting the capital adequacy standards, or not well diversified.
ADCB is proud of having 12% above the standard norm of capital adequacy, beside a wide network of
financial investments and hedging.
ADCB one of the largest Banks in UAE and widest network of services in 2014 Retail banking contributed with
42% of the year Net profit, followed by Treasury and Investment which made 28% contribution, Corporate
(Wholesale corporate & SMEs business) 26%, and 4% from property management.
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Worth noting that Islamic services are available as a part of both consumer and wholesales services, operates
from 48 local Branch within UAE side by side with 3 international branches 2 in India and one in UK.
Shareholders
ADCB is a Government bank with
• 58.08% shares presented for Abu Dhabi Investment Council.
• 1.35% Government of Abu Dhabi entity.
• 25.57% free float (Individuals, Corporates, and UAE royal family members).
• 7.02% Tresury shares (ADCB)
• 7.98% foreign investors.
B. Banking Environment in UAE
The data provided by banking system in UAE reflect a strong banking position that will be capable to
withstand despite the economy pressure caused by the sharp decline in oil price.
All indicators from profitability, NPLs ratio, capitalization level and further improvement in loan and deposits
growth.
The IIF (Institute of International Finance) estimates that with an average oil price of $98 a barrel for 2014,
the country’s GDP growth is estimated at 4.4 per cent with hydrocarbon sector growing at 3.3 per cent while
non-hydrocarbon sector growing in excess of 5.5 per cent with a fiscal surplus of 7.1 per cent of the GDP.
With the slowdown in oil prices the IIF official said, the UAE and all other GCC countries will witness decline in
GDP growth, current account balances and fiscal balances.
According to the IIF estimates, even if the oil price is to average at $60 a barrel in 2015, the UAE’s GDP should
grow by about 3 per cent and in the worst case scenario of oil averaging at $50 a barrel, the IIF estimates that
the GDP growth will be about 3.3 per cent”.
Outlook
Economy environment overall:
Several global challenges made the year 2014 a unique year in terms of economic climate that will have an
impact on business in the UAE in 2015.
A various concerted actions by the United Nations have been taken place due to the global tension caused by
the dispute between Russia and Ukraine, China and Southeast Asia, and Syria and its neighbors.
The aforementioned led to embargo of Russian financial institutions and its fuel exporters, Middle east war
between extremists, Oil prices sharp decrease and the movement of Abu Dhabi and Dubai stock exchanges.
Among these matters ADCB kept marching into improvement. “Capital Intelligence (CI) has stated the
Financial Strength Rating of the UAE's Abu Dhabi Commercial Bank (ADCB) at 'A-’. Good operating
profitability and return on averageassets (ROAA), and solid capital adequacy being major supporting factors.
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Customer concentrations in both loans and customer deposits and tighter than sector-average liquidity ratios
are major rating constraints.
The Foreign Currency Ratings are maintained at 'A+' Long-Term and 'A1' Short-Term and the Support Rating is
'1'. The ratings are underpinned by the Bank's ownership, good financial fundamentals and the high
likelihood of support from the government of Abu Dhabi. A 'Stable' Outlook has been assigned to all the
ratings.” (Capital intelligence affirms ratings on ADCB).
C. Financial Highlights
ADCB financials is audited by PricewaterhouseCoopers which established in the region for 40 years, PwC has
more than 3,000 people in 12 countries across the region: Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon,
Libya, Oman, Qatar, Saudi Arabia, the Palestinian Territories and the United Arab Emirates.
Their regional team of more than 3,500 people operates across the Middle East bringing international
experience delivered within the context of the region and its culture. They can bring the collective knowledge
and experience of over 195,000 people across the entire global PwC network in advisory, assurance and tax.
Audit opinion
It is an unqualified audit opinion as stated hereafter:
“In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of the Group as at December 31, 2014 and of its financial performance and cash flows
for the year then ended in accordance with International Financial Reporting Standards.
Further, in respect of the Bank, as required by the UAE Federal Law No. (8) Of1984, as amended, we report
that we have obtained all the information we considered necessary for the purposes of our audit; the
financial statements of the Bank comply, in all material respects, with the applicable provisions of the UAE
Federal Law No. (8) of 1984, as amended, and its Articles of Association; the Bank has maintained proper
books of account and the financial statements are in agreement therewith; and nothing has come to our
attention which causes us to believe that the Bank has breached any of the applicable provisions of the UAE
Federal Law No. (8) of 1984, as amended, or of its Articles of Association which would materially affect its
activities or its financial position as at December 31, 2014. Further, as required by the UAE Union Law No.
(10) of 1980, as amended, we report that we have obtained all the information and explanations we
considered necessary for the purpose of our audit.”
For PricewaterhouseCoopers
January 25, 2015
Most important figures and Basic ratios
(Table 2)
5. 5 | P a g e
D.Financial Analysis
Assets Quality
Total assets grew by 11.5%, from AED 183.143 Mn in 2013 to AED 204.019 Mn in 2014, mainly from loans and
advances (AED 9 Bl), deposits and balances due from other banks (SED 5 Bl) and cash with central bank (AED
5 Bl). This growth in assets have majorly been financed by customer deposits (AED 10.5 Bl) which is the
cheapest source of funding, followed by the borrowing (liabilities) (AED 6.5 Bl).
Hereafter a small table represents the assets composition and the changes YOY:
(Table 3)
The Bank’s risk classification of loans and advances which is in adherence with the recommendations of the
Central Bank of the UAE guidelines is as follows:
(Table 4)
NPL ratio stands at 3.1% as of 2014 versus 11.1% as of 2010, while the ongoing oil price is going down which
may cause deceleration in future economic growth. However, the current NPL improvement reflects:
- The enhanced recovery operating specially in Dubai where the majority of impairments used to come
from.
- After the earlier crises a clear improvement in risk management and strategies took place and led to
clean-up in the assets portfolio.
- NPL coverage has properly increase to 147% as of December 2014.
- Focusing on holding a high quality securities in the investment book. (Earnings Presentation, 2014)
Capital Adequacy
The auditors M/s. Powerwaterhouse has demonstrated the basis on which CAR was calculated in ADCB is
based on the guidelines developed by the Basel Committee and the Central Bank of the UAE.
Hereafter is the equity tiers changes on YOY:
(Table 5)
Equity to total assets ratio
It shows how far equity contributes in assets financing. In ADCB case Equity to total assets ratio was
maintained almost at the same level except a little down movement from 14% in 2013 to 13% in 2014.
Risk-weighted Capital adequacy ratio (CAR)
As an attempt from ADCB to keep an eye on concentration on customer group, industry, geography and
credit risk profile. The top 20 largest exposures were reduced from 41.44% of gross loans of 2013 to 37.04%
in 2014, nevertheless the Net loans and advances have grown overall.
ADCB capital adequacy ratio was above the minimum requirement of 12% for 31 December 2014 (31
December 2013 — 12%) stipulated by the Central Bank of the UAE.
Monitoring Capital adequacy ratio is meant to protect banks against unfavorable high leverage, insolvency
and keeps them away from troubles. It is defined as the ratio of FI’s capital linked to its current liabilities and
risk weighted assets. While, Risk weighted assets is a measure of amount of banks assets, adjusted for risks.
6. 6 | P a g e
Adequate capital ensures that the bank has sufficient capital to finance business expansion, and it is an
indicator that its net worth is enough to offset financials downturns avoiding insolvency risk. It is the ratio
which determines banks capacity to meet its obligation and other risks such as credit risk, market risk,
operational risk etc.
ADCB has strengthened capitalization by improved profitability
The bank's Tier 1 ratio reached 17% as of December 2014 versus 12.4% as of December 2009. This increase
came as a reflection of the asset portfolio cleaning-up and the stake sale of 24% of RHB Capital in Malaysia in
2011. (Earnings_Presentation, 2014)
Liquidity
Liquidity ratio
It is important for banks to make sure that enough cash is ready to meet the short term obligation.
Moreover, 60% Liquid assets coverage is implemented since January 2015, and 100% liquid assets coverage
for the expected cash outflow for 30 calendar days will be required in 2019 as per Basel III.
In ADCB case Liquidity ratio was augmented by 3% from 12% in 2013 to 15% in 2014 due to increasing in both
Cash and balances with CB & deposits and balances due from banks.
Liquid assets for ADCB are (Cash and balances with CB & deposits and balances due from banks).
Adequate liquidity ratio is recommended, less than the standard norm exposes the bank to short term
default during a stress time, and more than the norm means an cash assets (Non generating income assets)
were kept without proper investment, and opportunities were neglected, in other words, some alternative
opportunities of making additional profits will be lost.
Banks must keep an adequate margin of cash and cash equivalent to meet the normal daily operation
knowing that depositor may choose to withdraw from their deposit accounts, while the deposit mass is used
in financing the assets (loans) which is a longer investment and can’t be liquidated on demand.
Moreover, the deposits are meant to be invested in loans in order to generate a spread and eventually profit
to banks.
Between these two aforementioned criteria banks needs to maintain suitable Loan to deposit ratio.
In ADCB case LTD ratio is a bit in a high level nothing but 2% decreases from 114% in 2013 to 112% in 2014.
ADCB offsets the higher LTD ratio by nicely maintained CAR, as stated earlier the capital adequacy ratio was
above the minimum requirement of 12% for 31 December 2014 (31 December 2013 — 12%) stipulated by
the Central Bank of the UAE.
In big banks Deposit from banks is a very tiny compared to deposit from customers, however that will make
the LTD ratio little higher than that one calculated on the basis of customer deposits alone.
Deposits to total assets
This ratio indicates to the total anticipation of deposit in financing the bank’s assets, as a matter of fact the
total assets are financed by equity and liabilities.
And since the deposits (part of liabilities) are counted as cheapest source we take it into consideration for
such study.
In ADCB case deposit contributed up to 63% in assets financing in 2013 and almost similarly in 2014 (62%)
7. 7 | P a g e
Generally speaking Retail banking distributes the amount invested over a large spread of customer which
eliminates the risk of assets concentration Risk and provides a diversification feature. Whereas, the mass that
invested in one particular corporate customer is too high compared to a retail’s, this exposes the bank to risk
in case of customer default. However, higher the risk better the profit. (Earnings Presentation, 2014)
ADCB managed to achieve a material improvement to its liquidity position with:
A liquid assets to total assets ratio improved to 28% as of December 2014 from 20% as of December
2010.
An investment book composed of more liquid instruments.
However, loans-to-deposits ratio still remains relatively high compared to UAE peers at 112% versus
88% as of year-end 2014 constraining growth. (Deposit ratings, 2014)
Profitability
Growth
The composition on profit in FI is Net Interest Income NII)and Non-Interest Income (fees and commissions).
The profitability increases when NII increases considering the other profitability factor remains the same on
YOY basis
In ADCB case NII recorded an increase of 2.86% YOY basis, by moving from AED 5,429 Mn to AED 5,585 Mn in
2014.
Volume of Loans
Loans are very important component of the assets because of their nature as an income generating tool, so
increasing of loans is always profitable to any FI as long as they arecarefully choosing their source of fund.
In ADCB case we observe an uptrend in the volume of loans of which can be represented as a percentage
6.77%.
One more important key to determine the FI profitability is the Net interest rate spread, which is the
difference between the yield that FI receives from assets and the average interest rate it pays on the source
of funds.
In ADCB case the Net profit was augmented by 16% crossing AED 4 bn for the first time, operation income
increased to reach AED 7,529 Mn supported by 3% increase in total net interest income and 3% increase in
non-interest income.
By the other hand, the cost of fund improved and recorded a materialdecrease of 17%.
Obviously ADCB is relying more on NII rather than Non II, where NII income is 74% of the operating income,
and the NON II is 29% only. (Earnings Presentation, 2014)
Expenses & Efficiency:
Cost to income ratio was maintained at the same level (32% in 2013 and 34% in 2014) despite the 9%
increase in operating expenses.
Seems to be the increase in operation expenses of 9% was sensible and led to a profit by the end of the day.
In the same context earnings quality was notably improved by:
8. 8 | P a g e
A reduction in cost of funds to 0.9% as of December 2014 versus 2.8% as of December 2009
supported by an increasing proportion of low and zero-cost deposits.
An increase in net Non-interest income.
A lower anticipation of trading income.
A major reduction in cost of risk as impairment allowance stands at 10% of the bank's operating
income as of December 2014 compared to 62% as of December 2010. (Deposit ratings, 2014)
ROA & ROE
Return on equity indicates to how much profit the FI has made by investing the shareholders equity. In ADCB
case the ROE grew from 15.5% in 2013 to 18.1% in 2014.
But as we know the investment is not limited to equity alone, generally speaking the largest source to
financing the assets is the liability, therefore we consider another ratio to interpret the profitability by linking
the net income to total investment which is total assets (Return on Assets ROA). ADCB ROA showed an
uptrend from 1.72% in 2013 to 2% in 2014. (Earnings Presentation, 2014)
E. Management
The strong management led ADCB to win many awards in several aspects and trends, these awards are on
both local and Middle East level.
In 2014 The Banker Middle East Product Awards rewarded ADCB as “Best SME Customer Services”, “Best
Trade Finance Offering”, and Best New SME Product”, adding to many other rewards were given to ADCB in
the last five years.
ADCB experience was enhanced by the variety of Banking and financing services they offer to their clients
likeretail, commercial, investment, merchant, brokerage and fund management activities, and the geographic
expansion they have made by running two branches in India and one in UK.
Among the rapped technological development in the world, ADCB managed to reach their client in every
possible way by establishing the best modern banking tools in the region, starting from their website and
internet banking followed by SMS Banking, mobile banking and ADCB applications compatible with both
Android and IOS systems. (Awards and recognition, 2014)
F. Swot Analyses
Strengths
One of the largest banks in UAE.
Large shareholder fund and market capitalization. Tier 1 capital is 12.7% of total source of fund as
per their audited financials for 2014.
One of the highest capital adequacy ratio in UAE at 21% for 2014.
Wide customer base, serving over 561,000 retail customers and 43,000 corporate and SMEs client.
9. 9 | P a g e
Highly diversified by offering Full-Services commercial bank product as well as financial solutions like:
Investment, Merchant, Brokerageand Fund Management.
Wide network of 50 Branches 3 pay offices and over 300 ATMs beside the internet banking and
mobile applications.
Branches out of the region two in India and one branch in the UK.
Weaknesses
The bank is exposed to event risk because of the sector and related party concentration.
Loans-to-deposits ratio is relatively high compared to UAE peers at 112% versus 88% as of year-end
2014 constraining growth.
ADCB relies on market instruments, which is considered a less stable source of funding than deposits.
G.Recommendation
Overall ADCB has recorded an uptrend curve in terms of size, profitability, credit worthiness, and capital
adequacy.
This general growth was emphasized on during the last five years, and high probabilities to expansion are still
there for the upcoming year at least.
Almost all the indicators agree on the continuous improvement of ADCB, while only few comments are to be
taken care of in the future, starting with high loan-to-deposit ratio which need to be maintained in a lower
level.
Well I agree that the bank is exposed to event risk due to related party concentration, but this is a common
trait for all government banks in the UAE.
10. 10 | P a g e
Emirates NBD
A. Background
Emirates NBD formed on October 2007 by merger between Emirates bank international and the national
bank of Dubai. Emirates NBD became one of leadings banks in the GCC by taking the advantage of merging
second and fourth main banks in UAE. Bank’s controlling over 15.5% of UAE market asset shares powered by
big coverage network more than 215 branch and 889 ATMs across country.
Their vision is to be “globally recognized as the most valued financial services provider based in the Middle
East”, this vision driving NBD to operate overseas in Egypt, Saudi Arabia, United Kingdom and Singapore
beside operating several representative offices in China, Indonesia and India.(Annual report 2014)
Emirates NBD recently operate in Egypt initially by acquisition of BNP Paribas Bank in order to expand its
coverage network that reaches to 60 different branches all over the country(Unsupported source type
(InternetSite) for source Egy15.). ENBD is looking to achieve its vision through operating with expanding
strategies in order to be exist and operate in different countries within different regions which help’s in risk
diversification while the bank be exposed to different markets risk, however they still majority operating in
GCC and specially in UAE.
As an evidence of banks performance, Emirates NBD has earned number of awards through last few years
including ‘Bank of the year’ at gulf business industry awards at 2014, in addition to ‘CEO of the year’ for asset
management business.
Emirates NBD operate in several lines as large portion of its business is in corporate banking however by the
significant increase of branches and ATM’s referring to the bank is looking for to increase concentrate on
retail banking. Due to the group, mainly operating in GCC and Middle East Islamic banking window is in
continuous increase as for major banks in the region. Besides corporate banking has noticeable investment
activities and product services.
Dubai government owns 55.6% of Emirates NBD shares representative by Investment Corporation of Dubai.
(Unsupported source type (InternetSite) for source Own15.)Governments are able to rescue Banks from
unfavorable events and insolvency better than any other entity due to the continuous availability of funds.
However, the less diversified shareholders will let government to be the main controller and has the power in
implementing and planning for bank strategies.
B. Banking Environment in UAE
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UAE is relatively a new country that have got high growth rate besides its economy shows high growth.
Considered the third largest economy over Middle East after Saudi Arabia and Qatar with real gross domestic
product 383.80 billion dollars. Which give huge opportunities to national banks to get benefit from the
economy growth.
In 70s to 90s UAE was approximately full depend on oil revenue but after 90s they used these revenue in
attempting to diverse there economy by building advanced infrastructures and industries. This attempt of
diversification in the economy structure need to be managed and financed by banks.
On 2014 the percentage of oil sector from GDP from 38% and they plan to decrease it more. While they
attempting to diverse there economy by tourism which consider the second biggest source of revenue for the
country after oil.(Unsupported sourcetype(InternetSite)forsourceUAE14.)
Despite the sharp decline of the oil prices, the main indicators of banks such as (NPLs) provisions and Capital
adequacy ratio continuously show improving’s, which reflects the strength of banking system and its ability to
handle the slowdown of the economy growth.
However, the orientation to reduce the oil dependence still not very effective therefore will sharply effect the
economy during the low oil prices that started from the second half of 2014. Resulting declines in the
estimated GDP growth for 2015 by 4.5% instead of 5%. According to IIF that most of GCC will not be hardly
effected with the oil prices up to the price for barrel is above $50 which declined and reached to $48 per
barrel for several weeks.
According to Zawya NPL to total gross loans is expecting to decrease by 6% on 2014 comparing to 9.2% at
2013. Taking into the consideration first half of 2014 showed high growth which relatively give chance for
banks to cover the loses or any effect’s from the reduction of oil prices beside that it give opportunity for
central banks and banks to increase their reserves in order to faces unexpected events.(Augustine 2015)
According to Moody’s Investors services has rated Emirates NBD in UAE at Baa1 long term deposit rating
beside improving the outlook rating from negative to stable basing on improvement of Dubai economy (the
main operating environment) due to the strong relationship and the high dependence on Emirates NBD to
the government of Dubai. Which in return highly supported by the government in case of any unexpected
events. However, they range baseline credit assessment between baa1 and baa3 driven by several factors:-
(Moody’s Investors Service, Inc 2015)
Strength driven by retail business through largecoverage network all over UAE.
Improving in asset quality due to Strong risk management framework beside solid treasury functions.
However comparing to other banks in UAE, Emirates NBD has week asset quality due to high NPL
ratio and relatively adequate ability to absorb loan losses.
Lack of diversification due to heavily related to third party and borrower beside sector
concentration.
C. Financial Highlights
12. 12 | P a g e
Financial statement had been audited by Ernst & Yong, which is one of the big four was founded on 1849 in
England, It operate with 190,000 employee over 150 countries. Firm formed by merger between Ernest &
Whinney and Arthur Young on 1989. It provide assurance services, taxation and advisory services.
Auditors has unqualified audit opinion as detailed “In our opinion the consolidated financial statements
present fairly, in all material respects, the consolidated financial position of the Group as at 31 December
2014, and its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards.”
Most important figures and Basic ratios
(Table 6)
Asset quality
(Figure 1)
Emirates NBD Asset profile has shown growth by 6.13%. This increase exceeded 21 billion was focused mainly
by the rise of cash held with central bank for 18 billion beside the rise of issued loans that increased by 7.6
billion that was focused on Islamic products and retailloans.
While the main source of growth powered from current and saving Islamic customer deposits beside other
customer deposits which increased for 22% and 4.5% respectively for sum of 18 billion reflecting the growing
number of branches that reach 215 by taking into the consideration the trend to acquire retail market share
in Egypt. Borrowed funds has also been remarkable raised for remarkable percentage 35.6%.(Consolidated
Financial Statement 2014)
Along with huge deposit amount in their balance sheet they are bearing cost overhead of 215 branch.
However Emirates NBD uses its main source of funds (deposits) in issuing different kind of loans that
significantly reflecting in net loans over deposits ratio that reaches to 95% on 2014.
In terms of asset quality, Emirates NBD showing decreasing in Nonperforming loans to total loans ratio in
2014 by more than double from 14.4% to 7.5% 2013 2014 respectively. The impaired loan ratio improved for
0.4% reaching 13.9% at 2014. During 2014, Emirates NBD doubled its coverage ratio by over 43% comparing
to past year and achieving 100.3% at 2014.(Annual report 2014)
Capital adequacy:
Capital adequacy is very important analysis, which is reflecting how the bank is able to tolerate unexpected
loss from its own equity. Central bank playing large role in monitoring the group capital adequacy, the group
following the requirements of Basle II framework with taking into the consideration UAE Central bank
adjustments.
Equity to asset ratio is one of the ratios that used to indicates the percentage of the assets have been
financing by the equity. Emirates NBD is showing growth in this ratio by 13% in 2014 comparing to 12% at
2013. Which reflects that Emirates NBD is using an expensive source of fund (Equity) to financing its asset,
but with small percentage comparing to deposits that increased by 8% in 2014.
13. 13 | P a g e
Although equity to asset ratio is important indicator but it does not show the full picture because it treat all
assets with the same risk weights, in order of that Capital adequacy ratio is more detailed and specific.
Capital adequacy ratio is a ratio that measures the bank’s risk of insolvency from excessive losses that capital
will not be able to cover it, maintaining this ratio at international standard, which is 8% protecting depositors
from losing their money. It illustrates the proportion of capital covers current liabilities and risk weighted
assets. The standard capital adequacy ratio will grantee an appropriate level of capital that will cover any
unexpected unfavorable events and save depositors money by decreasing the probability of bankruptcy or
insolvent.
Throughout past few years, NBD has adherence to the requirements of UAE Central bank regarding capital
adequacy ratio. At the end of 2014 the bank capital adequacy ratio was 21.06% and tier1 was 18.03%
compared with 2013 were 19.64% and 15.27% respectively showing strengthen by 1.5% mainly due,(BASEL II
– PILLAR III DISCLOSURES 2014)
1- Repayment of the final amount of Ministry of Finance Tier 2 deposit, which will decrease Tier 2.
2- Growth in retained earnings.
3- Decreasing in risk-weighted assets.
4- Issuance notes with 500 million USD that increased Tier 1.
By comparing capital adequacy ratio (21.06%) with equity to asset ratio (13%) for the same year 2014, we can
realize a large different between them which explains how effective NBD mitigating risks in assets by
reducing it and increasing in operating of less risky weighted assets.(Investor presentation 2014)
Emirates NBD mangers has approval on the same dividends comparing with past years 1,387.9 million AED
that contributes by 11% only of the total 2014 Retained earnings comparing with last year contribute with
45% which consider a high percentage of profit distribute it instead of reinvesting it in the
group.(Consolidated Financial Statement 2014)
Liquidity
Emirates NBD saw on 2014 strong improvement in liquidity as it shows improvement in liquid asset to total
assets ratio from 17% at 2013 to 21% at 2014. However high liquidity ratio does not always indicate to good
performance, high liquidity ratio indicates to the fact that many investment opportunities were lost. On the
other hand, liquidity during unfavorable events mitigates the risks and prevents from force sale at low prices.
High liquidity in Emiratis NDB existed mainly due to increase of (interest free statutory and special deposits
with central banks) with more than 5 billion compared to 2013. Moreover doubling the interest bearing
certificates of deposits with central bank for more than 13 billion. Conclude that group has cash and deposits
with central banks reached to 56 billion at 2014 that cover 18% of total liabilities comparing to 12.8% a year
before.
The bank has shrinking net loans to deposits ratio from 99% to 95%. As deposits consider being the cheapest
source of fund, that bank’s increasingly depend on expensive source of funds to cover its loans. Overall
deposits to asset ratio increased slightly from 70% to 71% in 2014.
Profitability
Emirates NBD continues showing level of operation profitability reflected through the significant increase in
Net interest income by 1 billion AED on 2014 more than 15% that achieved on 2013. This growth supported
by strong rise of total loans estimated by 6 billion additional from 2013.
14. 14 | P a g e
Interest rate spread played an important role in increasing bank profitability it increases from 2.63% by the
end of 2013 to 2.83 by 2014 due to few reasons:
1. Loans spread increased by higher yield in Islamic assets and retail interest.
2. Deposits spread raised due to repayment of ministry of finance tier 2 and rising of current and saving
account.
3. Treasury spread enhanced by strong investments activities while the cost of wholesale became
cheaper.(Investor presentation 2014)
Non-interest income showed 33% growth by 5 billion explaining their claim of rising off balance sheet
activities, which is reflected in:-
1. Net fee and commission from retail, forex, brokerage and trade finance increased by 25% comparing
with 2013.
2. Property income increased by 57% because of giant sales.
3. Investment securities improved by 66% helped by Developing of new product (eIPO system).
In 2014 Emirates NBD is successfully implements its strategy, which is about increasing the efficiency of
utilizing banks resources to achieve higher profit with less cost. That is reflecting clearly on number of ratios,
which represents how well bank managers areoperating it.
1- Cost to income ratio during 2014 cost to income ratio enhanced to 30.4% more than last year by
5%.mainly due significant growth of income that raised by 20% comparing to cost that increased by
only 5%.
2- Return on asset: improved by 1.5% on 2014 due to the strong increase of group profit by more than
57.8% offsetted with rising in asset value by 6% only.
3- Return on equity: improved to 17.4% at 2014 comparing to 11.9% for 2013.
The efficient cannot be measured by focusing on one ratio because it can be easily overstated, every ratio has
its own blond area that’s why it’s important to take into consideration various ratios in order to draw full
picture on banking management performance.
Coverage ratio is the ratio that shows the ability of the bank to cover its non-performing loans by keeping
allowances improved in 2014 by reaching to 100.3% on 2014 compared to 58% in 2013.
D.Management
Emirates NBD management has unique experience due to the large variance of employees nationality and
qualifications, which end up with generating valuable knowledge facilitate introducing Emirates NBD as high
performance bank in the region.
Mangers experience have been use in devolving advanced Bank’s strategies and achieve outstanding
performance reflected by gaining more than 20 awards that have been earned from different entities. The
two most prominent awards are the “CEO of the year” at Global Investor/ISF Investment Excellence Awards
and “The Bank of the year” at 2014 by gulf business industry.
15. 15 | P a g e
As implementation of their expansion strategy, they continually increasing the number of banks activities and
services beside the concern to be present in the hub economic countries by opening representative office in
China, Indonesia and India in order to enhance the banks reputations.
Overall management worked for past years to improve bank performance after the crisis and it present they
successfully achieve their short term goals by end of 2014 through repayment of the final amount of Ministry
of Finance Tier 2 deposit. Beside Emirates NBD is looking to expand its operation in different countries
started by Egypt which contributed to increase bank revenue by 16%.(Unsupported source type
(InternetSite)for sourceAwa15.)
E. Swot Analyses
Strengths
High qualified and professional management facilitate the improvment of banking
performance and overcome banks weakness’s by finding creative solutions.
Highly Presence in UAE powered by the continuous caring to reach to their customers
everywhere with owning more than 800 ATM and 200 branches all over UAE.
Growth in deposits books by 12% on 2014 opens many opportunities for NBD to increase
their activates and products.
Emirates NBD has highest Net interest income (22%) in UAE with higher focus in retail and
Islamic products.
Weaknesses
Lack of asset diversification with high dependence on Dubai government.
Not enough sophisticated online banking comparing to competitors in the market, by
wasting many opportunities from advanced mobile applications in order to sell many
banking products.
Although the expansion strategy and the operation recently in Egypt they still limited in the
presence in many of the major economies in the world.
Bank don’t search to increase anther source of fund beside customer deposits.
The increasing of staff cost by 5% due to high turnover which reduce theemployee loyalty to
the bank.
F. Recommendation
Emirates NBD is named as the largest bank in the UAE witnessed a very profitable year with hike of 57% in
Net Profit on YOY.
Emirates NBD kept its financial ratio at or closely around the standard norms, but still need to monitor its CAR
especially that the exposure to Dubai Government related party are zero risk weighted which I consider as
unfairly counted for, whereas, largest bank in the country is meant to provide a systemic support.
16. 16 | P a g e
UNION NATIONALBANK
A. About of Union National Bank
Union national Bank is One of the successful bank in UAE as it was established since 1982 I with public joint
stock company and the main office in Abu Dhabi with, Union National Bank led by Mr. Mohammad Nasr
Abdeen the CEO of UNB group and with a continues success and dynamic increase in annual profit, UNB –
one of the leading banks in the UAE and the only bank owned by both governments of Abu Dhabi and
Dubai,Mr.Abdeen led the group for expansion strategy to include UNB brokerage UBC,AlWifaq Islamic
finance, UNB Egypt ,Qatar,Kuwait and office in shanghai.
UNB channelof service
UNB deliver banking service to wide range of customer’s through more than 80 branches in UAE and
branches across the world as follow,
Abu Dhabi : 27 branches
Al Ain :7 branches
Dubai :22 branch
Sharjah and N,emirates :16 branch
Union brokerage :3 branches
Al Wifaq Islamic finance: 4 branches
UNB Egypt :32 branch
UNB Qatar :1branch
UNB kuwiat :1branch
UNB deliver through those channels verity of products and services to customers starting from individual
banking and more advanced requirements of corporate organizations and net worth customers, in all clients
categories UNB offer Islamic finance as per sharia and conventional products as well to satisfy the market
needs in all market segments individual or corporate, In addition to that UNB offers Investment, brokerage and
initial public offering through UNB brokerage offices (UBC)
UNB special in banking sector and announced to be public joint stock with 60% UAE government share
holder and 40% public share holders,ChairmanH.H. Sheikh. NahayanMabarak Al Nahayan and board
members.
Vision and Mission
Union national bank has stated clear mission and vision for the coming years,
Vision Statement (2010-2018)
in the vision UNB concentrated on the quality of service as they aspire to be the best in class in the banking
sector in UAE
Mission Statement (2013-2015)
UNB mission concentrated on the stability of the financial results Through innovation in banking, staff well-
being and high performance customer service.
17. 17 | P a g e
B. Banking Environment in UAE
Despite of the recent oil crises, UAE economy remain stable and maintain its growth rates the reason of the
well diversified economy and with many field as tourism, logistics, trade, and real estate which in turn help to
minimize the focus on oil prices in the economy. Moreover government expenditure on potential projects
will have impact on UAE economy.
In GCC and although the unplanned decrease in oil prices, the overall growth expectation of GCC during
2014-2015 tend to be healthy as per IMF report about GCC growth rates ware
External Auditors
M/s Ernst & Youngware assigned as external auditors in 2014 by the board members in the annual meeting
on April 2014.
(Figure 2)
C. Financial Analysis
It is obvious that union national bank assets as a significant increase in the tear of 2014 AED (93,463,243,000)
comparing with year of 2013 AED (87,546,063,000). And that’s an obvious indicator of UNB strategy to
increase the assets portfolio.
(Figure 3)
On the other side UNB has a significant increase in liability side as well recording AED (76,538,416,000) in the
year of 2014 comparing with AED (72,208,418,000) in 2013 supported by customer deposits AED
(67,438,887,000) in 2014 while it was Aed(65,087,812,000)IN 2014
(Figure 4)
Liquidity position is perfectly managed with ratio 95.1% of credit to deposit as at 31 DEC 2014 The liquid
assets contain 26.8% investments constituted of the total assets as at 31 DEC 2014 (IN 31 DEC 2013was :
27.0%).
Furthermore recovery activities led to a more development in the asset quality . an improvement by 50
basis points in Nonperforming loans to gross loans ratio to be 3.8% as at 31 DEC 14 (31 DEC 13 : 4.3%). The
loan loss coverage ratio became more strong to be 97.2% as at 31 DEC 14 (31 DEC 13: 90.7%). Reduction in
impairment charge by 16% in 2014 to be AED 492 million (2013: was AED 586 million, AED 1.2 billion is the
general provision of as at 31 DEC 14 (31 DEC 15: AED 1.1 billion) represented 1.50% of the credit risk
weighted assets as at 31 DEC 14.
Capital Adequacy
Union national bank capital adequacy ratio at acceptable levels, as overall capital adequacy ratio being 19.9%
as of 31 DEC 14 (31 DEC 13 was: 19.9%) and it’s above the minimum regulatory requirement of Central Bank
of the UAE 12%, In the same side 18.7% is the Tier 1 capital adequacy ratio at as at 31 DEC 14 (31 DEC 13
was: 18.7%), UNB safely above the minimum regulatory requirement by the Central Bank of the UAE which is
8%.
Moreover retained earnings increased in 2014 to be AED (9,626,418,000) comparing with year 2013 AED
(8,440,246,000), General reserve increased in 2014 to be AED (34,282 22,364,000) comparing with 2013 AED
(9,334 6,089,000)
18. 18 | P a g e
CAR or CRAR is important indicator that show the ability of the bank to cover the insolvency and to protect
the depositors and the financial institution
(Figure 5)
Liquidity
liquidity with loan to deposit ratio of 95.1% as at 31 December 2014 and this considered a reasonable ratio,
since high liquidity considered as safety but not necessary good indicator since it shows part of the liability
not utilized in the form of assets .
Loans to customer deposits is 99% while loans to customer and bank deposits is 96%.
Profitability
In accordance with profitability strength , the return on average assets was 2.2% for 2014 while (2013: 2.0%)
and the return on average equity, (Tier 1 capital notes not included) was 14.3% for 2014 while (2013: 13.9%)
. The earnings per share in the year of 2014 was AED 0.69 while (2013: AED 0.59), increased by 17% in
comparison with 2013.
The capital ratios stayed strong in spite of a continuous business growth, with19.9% is Overall Basel 2
capital adequacy ratio as at 31 DEC 14 (31 DEC 2013 was: 19.9%) and 18.7% is the Tier I capital adequacy
ratio as at 31 DEC 14 (31 DEC 13 was: 18.7%).
UNB Group for the last few year concentrated on the technology and infrastructure to support the coming
years expansion. Today, among the conventional banks UNB recently succeeded to have the 3rd largest
branch network in the UAE, 12% is The increase in operating expenses in the year of 2014 to AED 955 million
(in 2013: AED 854 million), with 27.3 % cost to income ratio in 2014 (in 2013: 26.6%), continuing to be
amongst the best locally.
The net interest income increased by 2.6% in 2014 to be AED 2,670 billion while it was in 2013 2,602 billion .
D.Management
Union national bank management shows a very wisdom and stable management with the lead of Mr.
Mohamed Nasr Abdeen is CEO of– Mohammad Nasr Abdeen is as dynamic and success-driven as the
organization that he heads, proof is that UNB won more than 80 awards in banking field since 2001 till now
as result of strategic planning to adopt with the world standards and compete with the multinational banks in
rules and regulations.(Unsupported sourcetype(InternetSite)forsourceAwa.)
The most famous rewords that UNB won like First Bank in the region to be verified for adopting the
guidelines of ISO 10002 (handling of customer complaints) by Lloyd’s Register Quality Assurance in
2013, UNB became the first ever Bank to win the Sheikh Khalifa Excellence Award, Diamond by ADCCI
in 2012 and Union National Bank was recognized as the Best Banking Group in UAE at the World
Finance Banking Awards 2012.
19. 19 | P a g e
E. Swot Analysis
Strengths
UNB is one of the largest financial institution in UAE with expansion policy with strategic planning to diversify
the financial products to be not excluded on bank products only but to go beyond that to penetrate the stock
market, Islamic finance, insurance to satisfy largesegment of market need and different customer segments
In addition to that UNB is going to open many branches in and out UAE with the successful strategy in order
to maximize the overall financial institution profit
Weaknesses
as the banking sector has a very high competition in UAE market, most of the banks has advancement in
banking technology, UNB needs to go one step further toward banking technology in order to compete with
the banking sector competition in the field of channel of service and ease the operations process.
F. Recommendation
UNB is one of the oldest banks in UAE with stable and increasing profitability, it needs to have more
expansion in UAE market in order to compensate with largest banks in UAE
20. 20 | P a g e
Consolidated analysis
Introduction
In a market full of competition in banking sector with the exits of 24 bank in the field and with a limitation of
number of population, added to that the decreases oil price and government expectations from banking
sector to add value to GDP, challenge in banking became very serious in UAE specially when banks spent
efforts to gain market share either by pricing offers or by presenting a superior quality of service through
banking smart technology services.(Unsupported sourcetype(InternetSite)forsourceLis15.)
in this report we are about to compare 3 banks considered as competitive banks in UAE with the ownership
of DUBAI and ABU DHABI government with the stress of maximizing profit, market share, and portfolio. This
is shown clearly in the stable increase in net profit of the three banks and shows how banks have adequate
liquidity to cover any possible risk in the future,
This sort of banking stability reflect the whole economy stable environment added to UAE the reputation of
safety and low risk of insolvency.
Hereunder is the individual and consolidated report about three comparative banks ADCB, ENBD and UNB
with full analysis of 2013-2014 numbers and ratios.
Assets Quality
The three banks have grown in terms of total assets volume, the bigger improvement recorded by ADCB bank
(11.5% increase in total assets on YoY), followed by Emirates NBD (6.13% increase in total assets on YoY),
while UNB grewby 6.7% which is a considerable improvement as well.
The sources of this expansion varied between the three banks in Emirates NBD the hick came from the 29.7%
increase in liquid assets which been financed by the increase in total deposits, whereas in ADCB the
borrowing contributed in financing the assets beside the deposit.
UNB financed its assets increase from almost an equal portions from deposit, borrowing and equity.
Just like all the other banks in UAE our three banks have worked hard to enhancing their NPLs along with
their coverage ratio, well they could not make the same level of improvement but definitely they have made
an obvious step forward.
21. 21 | P a g e
The largest step was made by ADCB has increased its NPL coverage ratio properly to 147%, followed by
Emirates NPD which seen dramatic increase from 58% to 100.03%, and finally UNB have tried and made a
small positive movement from 91% to 97%.
ADCB NPL ratio stands at 3.1% versus 11.1% in 2013, similarly Emirates NBD have favorably reduced the same
ratio to 4% from 9% last year, and finally UNB kept the NPL ratio at 1% on YOY.
For the this year UNB can be considered as the less risky bank in terms of Assets quality, while ADCB will get
the second seat before Emirates NBD.
It is important to emphasize on the bank volume here, Total assets of UNB is 93.5 Bil, ADCB total assets are
204 Bil and 363 Bil for Emirates NBD.
Capital Adequacy
Our banks have calculated CAR based on the guidelines developed by Basel committee and the central bank
of the UAE.
However both Emirates NBD & UNB have managed to increase the Equity to total Assets ratio which
increased from 12% to 13% for Emirates NBD and from 17.5% to 18.1% for UNB, meanwhile ADCB Equity to
total assets ratio was maintained almost at the same level except a little down movement from 14% in 2013
to 13% in 2014.
ADCB capital adequacy ratio was above the minimum requirement of 12% for 31 December 2014 (31
December 2013 — 12%) stipulated by the Central Bank of the UAE.
At the same level Emirates NBD is proud of 21.06% CAR for 2014, UNB is not very less than its peer’s with
19.9% CAR for 2014.
The capital adequacy was given a special care, Tier 1 capital recorded 19.64% for Emirates NBD, 18.7% for
UNB and 17% for ADCB.
Generally speaking the capital adequacy and the risks attached to it are for sure minimized in all UAE banks,
while they are left exposed to event risk due to the related party big share.
Liquidity
We expressed the liquidity by two or three ratios, LTD ratio for the three banks was and been maintained in a
range from (29% to 114%).
Emirates NBD witnessed increase from 95% to 99% on YOY, while UNB increased the same ratio from 104.5%
to 112.2% in 2014.
ADCB who recorded the range max percentage managed to reduce it and eventually could pull the ration
down by 2% on YOY.
22. 22 | P a g e
These banks offset the high LTD ratio by the proper maintenance of the capital adequacy and CAR as
mentioned earlier.
Another indicative ratio is Deposit to total assets which indicates to the total anticipation of deposit in
financing the bank’s assets, as a matter of fact the total assets are financed by equity and liabilities.
ADCB deposits contributed in assets financing up to 63% in 2013 and 62% in 2014, Emirates NBD increased
the same ration from 70% to 71%, and UNB ration reduced from 74.3% to 72%.
When all ratios for liquidity are in the normal range for all the three banks, we squeezed the assessment and
chose to calculatethe CASH RATIO:
The best cash ration among our banks is Emirates NBD which enjoyed 17.2% cash ratio in 2013 and even
increased it to 21% in 2014.
ADCB as well managed to increase Cash ratio from 11.6% in 2013 to 15.2 2014.
Meanwhile UNB cash ratio decreased by 3.5% from 17.9% in 2013 to 14.4% in 2014.
Profitability
All banks showed overall increase in their profitability relatively to assets volume. The profit composition in FI
is Net Interest Income NII and Non-Interest Income (fees and commissions).
Emirates NBD showed the highest improvement in net interest income that recorded 16.68% comparing to
both ADCB and UNB is only around 2.7%as on 31/12/2014. Growth in profitability supported by several
factors most prominent is loans that have seen uptrend by 6.7% in both ADCB and UNB comparing to 3.2%
only in Emirates NBD.
Furthermore Non-Interest Income contributes in the 3 banks by less than 35%, however it worked out as high
as 31% in average for Emirates NBD and UNB compared to ADCB that raised by only 3%.
Overall, Net operating Income has been increased with differently in all 3 banks, however Emirates NBD
recorded highest operating income worked out at 20.05% compared to the others banks that didn’t exceed
9%.
Regarding the efficiency and expenses, UNB is the most efficient bank between the three of them,the thing
thatreflected in cost to income ratio 27.3% compared to ADCB and Emirates NBD averaged at 31%.
Return on equity indicates to how much profit the FI has made by investing the shareholders equity. In ADCB
case the ROE grew to 18.1% in 2014 compared to 11% for Emirates NBD and 14.3% for UNB, however the
largest source to financing the assets is the liability, therefore we consider another ratio to interpret the
profitability by linking the net income to total investment, which is total assets (Return on Assets ROA). ADCB
and UNB Return on asset showed an uptrend to 2% in 2014 while Emirates NBD recorded 1% only.
23. 23 | P a g e
Recommendation
Overall, three banks recorded different degrees of improvements in terms of profitability and asset growth.
These improvements generally strengthened by strong economy growth in GCC and UAE specifically as the
three banks operates mainly in UAE they are taking the advantage of many opportunities provided by the
developing economy .
However the three banks maintained high concentrations of shareholder that is owned mostly by the
government and therefore it appears many asset quality problems presented due to the high exposure to
event risk as during the financial crisis in 2009.
Management
The three banks management shows challenge to compete in the competitive banking market as ADCB
management won many awards and successfully manage to Increase the bank portfolio and profitability in
ashore period of time.
Emirates NBD with the same vision of Dubai government of Excellency of quality of service with a huge
number of branches increased on daily basis and renovation of all branches and ATM’s to have big market
share in banking sector.
UNB group with lead Of Mr. Nasr Abdeen expand their activities to be not excluded on conventional banks
only but to go through Islamic banking and stock market represented in AL WIFAQ FINANCE and UBC this
reflects the expansion policy and the strategic vision of the management to have ranking in the banking
market.
Bibliography
Awards and recognition. (2014). Retrieved from ADCB:
http://www.adcb.com/about/investorrelations/financialinformation/ARsite/2014/awards_a
nd_recognition.html
Capital intelligence affirms ratings on ADCB. (n.d.). Retrieved from CPI Finance:
http://www.cpifinancial.net/news/post/28885/capital-intelligence-affirms-ratings-on-abu-
dhabi-commercial-bank-adcb
Deposit ratings. (2014). Retrieved from Moody's: https://www.moodys.com/research/Moodys-
affirms-Abu-Dhabi-Commercial-Banks-A1-deposit-ratings-raises--PR_318478
Earnings Presentation. (2014). Retrieved from ADCB:
http://www.adcb.com/Images/4Q14_Earnings_Presentation_tcm9-46979.pdf
Earnings_Presentation. (2014). Retrieved from ADCB:
http://www.adcb.com/Images/4Q14_Earnings_Presentation_tcm9-46979.pdf
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2014,Annual report
/AnnualEnglish/Emirhttp://www.emiratesnbd.com/plugins/FinanceManagement/AnnualReport<
atesNBD_AnnualReport_2014.pdf>.
,ArticlesAugustine, BD 2015,
-_to_address_funding_challengeshttps://www.zawya.com/story/UAE_Strong_banking_sector<
GN_08022015_090208/>.
BANK, UNION NATIONAL 2014, 'ANNUAL REPORT 2014', REPORT, UNION
NATIONAL BANK, DUBAI.
2014,PILLAR III DISCLOSURES–BASEL II
http://www.emiratesnbd.com/plugins/FinanceManagement/AnnualReport/PillarIIIArabic/Emira<
tesNBD_PillarIII_Disclosures_2014.pdf>.
2014,Consolidated Financial Statement
http://www.emiratesnbd.com/plugins/FinanceManagement/AnnualReport/FinancialArabic/Emi<
.pdfratesNBD_Consolidated_FinancialStatement_2014>.
2014,Investor presentation
http://www.emiratesnbd.com/plugins/FinanceManagement/Presentation/English/Emirates_NB<
_FY14_Investor_presentation.pdfD>.
Moody’s Investors Service, Inc 2015, 'Credit Opinion: Emirates NBD PJSC', Moody’s
Corporation, Dubai.
25. 25 | P a g e
Appendix
Table 1
Loans NII Non-interest income Provision NI
QoQ YoY YoY YoY YoY
2% -3% -13% -54% 22%
Table 2
2014 2013 CHANGE %
A.Profile
Liquid Assets 31,111,653 21,305,906 9,805,747 46.02
Net Loans, Disct. & Advances 140,562,498 131,648,670 8,913,828 6.77
Long Term Investments 26,335,797 25,355,615 980,182 3.87
other Assets 6,009,515 3,404,638 2,604,877 76.51
Total Assets 204,019,463 183,142,536 20,876,927 11.40
Total Deposits 126,011,227 115,427,708 10,583,519 9.17
Total Liabilities 51,589,403 42,893,518 8,695,885 20.27
Net worth 26,429,230 24,821,310 1,607,920 6.48
Tangible Net worth 26,393,525 24,759,615 1,633,910 6.60
Total Income 7,529,398 7,319,619 209,779 2.87
Profit Before Provisions 4,966,338 2,358,186 2,608,152 110.60
Net Profit 4,201,384 3,619,644 581,740 16.07
Non-performing loans, net 4,610,999 5,721,508 1,110,509- (19.41)
Dividends 1,560,857 1,397,983 162,874 11.65
Minority interest 10,397 644,712 634,315- (98.39)
B.Profitability ( % )
Net Profit / Total Assets (ROA) 2% 2% 0.00
Net Profit /Equity (ROE) 16% 15% 0.01
Dividends / Net Profit 37% 39% (0.01)
Cost to income ratio 34% 32% 0.02
C. Liquidity
Liquid Assets / Total Assets % 15% 12% 0.04
Net Loans / Total Deposits % 112% 114% (0.03)
Net Loans/ Total Assets % 69% 72% (0.03)
Total deposits / Total Assets % 62% 63% (0.01)
D. Capital Adequacy ( X:1 )
Equity /Assets % 13% 14% 0.01
Capital Adequacy Ratio (CAR) 21.03% 21.21% 0.21
E. Asset Quality ( % )
NPLs / total loans 3.3% 4.3% 0.01
NPLs / total assets 6.72 4.75 (1.96)
NPLs / NW 17.45 23.05 5.60
Provision coverage ratio 1.370 1.097 (0.27)
26. 26 | P a g e
Table 3
Particular 2014 AED Mn 2013 AED Mn Change%
Liquid assets 31.111 21.305 46%
Loan portfolio 140.562 131.648 6.7%
Investment portfolio 26.335 25.355 3.8%
Other assets 6.009 4.832 24.3%
Total 204.017 183.140 11.4%
(Table 4)
Neither past due nor impaired Up to 30 days past due
Past due but not impaired loans Between 31 and 90 days past due
Past due and impaired Over 91 days past due
Table 5
Particular 2014 AED
Million
2013 AED
Million
Change%
Tier 1 26.033 24.408 6.6%
Tier 2 6.164 6.747 -8.6%
Total 32.197 31.155 3.3%
Table 6
2014 2013 CHANGE % of change
A.Profile
Liquid Assets 20,814,332 16,047,416 4,766,916 29.71
Net Loans, Disct. & Advances 66,968,075 64,890,852 2,077,224 3.2
Long Term Investments 6,061,345 7,052,580 -991,235 -14.05
other Assets 4,991,257 2,358,995 2,632,262 111.58
Total Assets 98,835,010 93,128,580 5,706,430 6.13
Total Deposits 70,312,722 65,239,795 5,072,927 7.78
27. 27 | P a g e
Total Liabilities 15,790,756 16,531,501 -740,746 -4.48
Net worth 12,731,532 11,357,286 1,374,246 12.1
Tangible Net worth 11,055,414 9,652,277 1,403,137 14.54
Total Income 3,989,067 3,322,839 666,228 20.05
Profit Before Provisions 2,794,181 1,141,966 1,652,214 144.68
Net Profit 1,399,137 886,568 512,568 57.81
Non-performing loans, net 4,301,889 8,066,918 -3,765,028 -46.67
Dividends 377,884 377,884 0 0
Minority interest 1,341 1,232 109 8.86
B.Profitability ( % )
Net Profit / Total Assets (ROA) 1% 1% 0%
Net Profit /Equity (ROE) 11% 8% 3%
Dividends / Net Profit 27% 43% -16%
Cost to income ratio 30% 34% -4%
C. Liquidity
Liquid Assets / Total Assets % 21% 17% 4%
Net Loans / Total Deposits % 95% 99% -4%
Net Loans/ Total Assets % 67% 69% -2%
Total deposits / Total Assets % 71% 70% 1%
D. Capital Adequacy ( X:1 )
Equity /Assets % 13% 12% -1%
Capital Adequacy Ratio (CAR) 21% 20% 1%
E. Asset Quality ( % )
NPLs / total loans 7% 14% 7%
NPLs / total assets 4% 9% 4%
NPLs / NW 34% 71% 37%
Provisions for BD / NPLs (coverage) 100% 57% -43%
28. 28 | P a g e
Figure 1
Figure 2
0
100
200
300
400
2013 2014
205.99 212.02
38.355 56.63920.587
19.81216.194
14.4832.354
33.95430
30
Billion
Asset distribution
Loans Cash and deposits with central Bank
Due from Banks Investment securities
Islamic financing receivables Other assets
