First Gulf Bank posts 11% increase in profits Q109

Abu Dhabi's First Gulf Bank (FGB) posted an 11 percent increase in first-quarter net profit to AED750 m ($204m), exceeding analysts' forecasts.

The figure for the three months to March 31 compared to earnings of AED675.35m in the same period of 2008, the firm said.

Analysts' profit forecasts ranged from AED530m to AED730m, in a Reuters survey in April.

Some 95 percent of the net profit was generated by the core banking businesses of the bank - corporate, retail, treasury, investments and islamic banking, the bank said in a statement.

"Quarter after quarter our core banking businesses continue to be a source of strength and are extremely successful in contributing to the consistent performance of the organisation," said Andre Sayegh, CEO of the bank.

Total revenue was AED1.319bn is 29 percent higher than the same period of 2008 and earnings per share was 0.47 dirhams for the quarter, versus 0.49 dirhams in the same quarter last year.

Expenses of AED293m during Q1 were lower than the fourth quarter of last year by AED118m, representing a 29 percent decrease year-on-year, the statement said without elaborating.

A senior bank official declined to comment when asked for details about lower expenses.

Cost to income ratio was at 22 percent when compared to the low percentage of 24 percent for the full year 2008.

"Our cost to income ratio is a clear evidence of the bank's efficiency in managing expenses which is helping the profitability of the organization," Sayegh said in the statement.

The bank booked provisions of AED220m towards retail and corporate portfolios, highlighting a provision coverage ratio of 235 percent and a non-performing loans to gross loans ratio of 0.7 percent.

An additional AED55m were also booked as investment provisions.

Capital adequacy ratio (CAR) was at 17.3 percent, after the injection of 4 billion dirhams by the Abu Dhabi Department of Finance as Tier 1 Capital.

The bank plans to convert AED4.5bn from the ministry of finance into Tier 2 capital in the second quarter of this year, which will further raise the CAR to around 21 percent.

Total assets stood at AED109bn ending first quarter, up 2 percent compared to assets ending December last year. Deposits increased by AED1.7bn to reach AED75.7bn ending first quarter while loans grew 5 percent to reach AED83.6bn end of first quarter.

(Reporting by )

READERS' COMMENTS

MORE FROM ARABIANBUSINESS.COM