NBAD approves distribution of 10% cash dividends and 10% bonus shares

At its Annual General Meeting held in Abu Dhabi, the National Bank of Abu Dhabi (NBAD) approved the distribution of 10% cash dividends and 10% bonus shares to shareholders listed in the share register held with Abu Dhabi Securities Exchange (ADX) as at 25 March 2010.

The meeting convened under the chairmanship of Mr. Nasser Ahmed Khalifa Alsowaidi, Chairman of the NBAD Board, to review and approve the directors' report, auditor's report and the financial statements for the year ending 31 December 2009.

The chairman announced that Mr. Matar Hamdan Al Ameri and Mr. David Beau had been appointed to the board as independent directors. These appointments further confirm NBAD's commitment to the principles of transparency and corporate governance.

An independent director's role is to provide assurance of the company's ethics performance and enhances the credibility of the information provided to stakeholders.

Addressing NBAD's shareholders Mr. Nasser Ahmed Khalifa Alsowaidi said: "I am pleased with NBAD's profits which were achieved in extremely challenging local and international operating conditions. The Group's business model and its businesses once again proved their resilience." NBAD reported flat net profits of Dh3,020 million for the financial year ending 2009 (Dh3,019 million in 2008). Diluted earnings per share were Dh1.35 per share compared with Dh1.37 in 2008. This profit was achieved after taking substantial collective provisions and despite the past year's credit and liquidity challenges.

Net impairment charges for the full year were Dh1,408 million of which collective provisions were Dh756 million, specific provisions and write-off charges were Dh797 million, mitigated by recoveries of Dh145 million.

Collective provisions of Dh1,604 million represents 1.25% of credit risk weighted assets.

The return on equity for the year is 20% realising our target for 2009. NBAD's medium term strategic objective is to maintain an average return of 25% over the full economic cycle.

Total assets at the end of 2009 reached Dh197 billion, 19.6% higher than at the end of 2008. Customer deposits rose from Dh103 billion at the end of 2008 to Dh121 billion at the end of 2009, a growth of 17.1%. Customer loans grew from Dh112 billion to Dh132 billion for the same period, a growth of 18.3%. - Emirates News Agency, WAM

Emirates Industrial Bank reports AED 98.16 million net profit

Abu Dhabi, March 9th, 2010 (WAM) -- The Board of Directors of Emirates Industrial Bank in their meeting under the chairmanship of H.E. Obaid Humaid Al Tayer, State Minister for Financial Affairs approved the director's report on the bank's activities for the year ended 31/12/2009.

According to Mohamed Abdulbaki, the General Manager of the bank, the meeting held at the head office of the bank in Abu Dhabi commenced by approving the agenda and attesting the minutes and resolutions of the previous board meeting.

The board of directors reviewed the final accounts of the bank for the last year showing that bank reported a net profit of AED 98.16 million during the year 2009 compared with a net profit of AED 77.184 million during the year 2008 representing an annual growth of 27.18% .

Furthermore, the board approved loans and facilities to several industrial projects operating in the sectors of metal works and furniture and wooden products.

Mohamed Abdulbaki while giving details of Directors' Report on the activities of the Emirates Industrial Bank for the Year Ended 31/12/2009, said: "It is my pleasure to present to you the detailed annual report about the activities of the Bank for 2009, which reflects its achievements and performance throughout the year. The EIB activities during this year were accompanied by economic and structural changes, which resulted in certain implications on the performance of the Bank on one hand, and influenced its legal status and ownership on the other".

Economic activities in the UAE, including those of industrial sector, were influenced by the current global financial crisis, and that drove many industrial investors to shy away from carrying out new projects. Meanwhile, some of those investors suffered shortage of liquidity due to the conservative credit policies adopted by commercial banks by the end of 2008 and early 2009, he remarked.

Moreover, the EIB witnessed structural changes manifested in the acquisition of the entire capital of the Bank by the UAE federal government, represented by the Ministry of Finance, along with a move to a merger with the Real Estate Bank, under a new name "Emirates Development Bank".

"This process will result in maximizing the funding capacity of the Emirates Development Bank, and multiplying its activities and will help the new-born Bank perform its developmental role, in a way well-suited with the changes that occurred in the local economy during the last three decades".

He said that despite the ramifications of the financial crisis, the EIB managed to continue its financing and developmental activities in 2009, thanks to stable economic and financial situations in the UAE, particularly after the rise of oil prices in the second half of the year. The EIB also benefitted from the government procedures which led to provide liquidity to local market and augmented confidence in UAE economy.

In this context, the EIB played a key role in revealing and explaining the real economic status in the UAE through studies and data published in the Bank's Monthly Bulletin. Through those reports and studies, many facts were disclosed showing the limited impacts of the global financial crisis on our National economy. They also explained the factors which will help expedite the recovery of economic activities in the country.

In the field of financing, the Bank studied 34 industrial projects during the year, out of which 27 projects were approved to be financed, and these projects were granted loans and facilities with a total value of AED 274.50 million.

By adding the volume of finance in this year to the accumulated volume in previous years, the number of projects studied by the Bank reached to 871 projects, out of which 640 had been approved to be financed with a total value of AED 4860.09 million.

As for the volume of disbursed loans and facilities during 2009, it amounted to AED 331.52 million, compared to AED 447.82 million in 2008.

By adding the volume of disbursed loans and facilities in this year to the accumulated volume of the same in previous years, the total value of disbursed loans and facilities by the end of year 2009 reaches to AED 3572.00 million.

To follow up and ensure the safety of financial and managerial status of the projects financed by the Bank, EIB staff conducted many field visits to the sites of those projects.

By the end of 2009, the fully recovered loans and facilities were 309 loans with a value of AED 1575.31 million, inclusive of due administrative and banking fees, as most of the clients repaid the installments of their loans and facilities on scheduled maturity dates, the report said.

Along with financing operations, the EIB displayed excellent performance in terms of conducting studies and researches and publishing data relevant to the economic and industrial development in the UAE and GCC countries. These research efforts contributed to the preparation of sectorial studies, and encouraged investment in industrial sector in particular and investment in other sectors in general.

In the same context, the Bank prepared 17 industrial profiles, which helped conduct feasibility studies for projects intended to be implemented by the private industrial sector in various Emirates of the UAE.

Positive returns for funds in GCC in 2009

Emerging market funds lead top performers
• Funds registered for sale in the GCC returned 33% for 2009
• Equity funds and mixed-asset funds were the best performers of the year, gaining 44.11% and 23.56%, respectively
• Real estate funds were the only asset type posting a negative annual return, losing 5.49% over 2009
• Lipper’s Islamic Equity Funds Index recorded a 17.09% annual return; Lipper Islamic Money Market Funds Index lost 0.61%

Dubai 1 March 2010: The latest Fund Market Insight Report from Lipper for the Gulf Co-operation Council (the GCC) countries reveals that all 69 Lipper equity categories posted positive annual performances for 2009, with the exception of the 39 funds invested in Kuwait which lost 18.13% on average during 2009, reflecting the weak performance of the Kuwait Stock Exchange.

Funds invested in emerging markets topped the annual ranking; Equity Russia returned 159%, Equity Indonesia rose 124%, and Equity Emerging Markets Latin America gained 104%. JPM Russia A Acc USD was the best performing fund registered for sale in the GCC over the year, returning more than 164%. Fourteen of the 20 top-performing funds available for sale in the region were invested in emerging markets, notably Russia, India, and Indonesia.

However, funds invested in the GCC lost momentum during the last quarter. Equity UAE fell by 16.35%, Equity Kuwait lost 17.50%, and Equity GCC decreased 8.44%, due mainly to impact of the Dubai debt crisis on their annual performance.

For GCC-domiciled funds, those invested in emerging markets also topped the rankings: Equity Emerging Markets gained 75.63%, and Equity Asia Pacific ex Japan rose 62.24%. Among GCC markets, the best performers were the 46 locally-domiciled funds invested in Saudi Arabia, increasing 30.44% on average during 2009, benefitting from the Saudi Tadawul All Shares’ annual performance of 27.54% - the best of the seven regional markets. SHC Saudi Equity, managed by Saudi Hollandi Capital, was the best performer among Saudi funds gaining 48.32% during the year.

Bond funds increased 16.07% over 2009, recording an impressive jump compared to the minus 10.19% return posted the previous year, mainly on market conditions improvement. Globally, high-yield categories topped the ranking, benefiting from spread tightening.

The 214 Shariah-compliant funds registered for sale in the GCC increased 12.5% during 2009, an improvement compared to the minus 28.57% return recorded the previous year. However, this jump was minimal compared to that of conventional funds which gained almost 36.50%.

“Islamic funds did not benefit from the spectacular rise of emerging markets, since they do not invest heavily in those markets; being much more focused on the regional GCC markets, which witnessed a tough last quarter 2009 with the fallout of the Dubai World affair,” explains the report’s co-author, Mériéme Boutayeb, Research Analyst at Lipper.

Shariah-compliant equity and mixed asset funds were the best performers, gaining 18.48% and 14.07% on average, respectively, during the year. On the other hand, real estate funds ended the year in negative territory, losing 9.76% over 2009. Again, Equity Kuwait was the worst performing category, decreasing 23.04%.

Caam Saudi Fransi Al Fursan BRIC Equity Trading was the best performing Shariah-compliant fund during the year, gaining 106.11%. This Saudi-domiciled fund benefited from significant exposure to the equity markets of Brazil, Russia, India, and China.

Dunny Moonesawmy, Lipper’s Head of Middle East Research and report co-author, concludes: “With the bursting of the real estate bubble, coupled with different government stimulus programmes, the GCC region looks set to emerge stronger and quicker than other countries, with the potential to match the pace of other emerging markets. However, it has become even more important than before for investors to be careful in country and stock selection. The next few years should be beneficial for fund managers with stock-picking strategies, as they take advantage of local expertise and understanding of the different challenges and opportunities facing GCC countries and their companies to create value for their investors.”

UAE banks continue to maintain a loan-to-deposit (LTD) ratio higher than prescribed by the UAE Central Bank

Most of the UAE banks continue to maintain a loan-to-deposit (LTD) ratio higher than prescribed by the UAE Central Bank and analysts expect this gap, which is estimated at US$10 billion (Dh36.7bn), will narrow in the coming period.

In spite of restricted lending that helped the ratio to improve since the last quarter of 2008, analysis of banks' data by Emirates Business showed that several banks far exceeded the recommended level.

In case of Abu Dhabi Commercial Bank, the loan-to-deposit ratio for 2009 was as high as 140 per cent whereas it was 118 per cent in case of Emirates NBD.

The latest Central bank data showed that the average ratio for the UAE banking sector stood at 103.5 per cent at the end of December. Individually, banks have been trying since late 2008 to narrow the gap between loans and deposits to maintain a balance. Though Abu Dhabi Commercial Bank achieved a higher deposit growth rate of 11 per cent against seven per cent in loans and advances, but its ratio was still pretty high at 140 per cent.

The bank had deposits of Dh86.3bn against a loan of Dh120.843bn at end of 2009.

In 2008, the bank had deposits of Dh77.744bn (excluding deposits of Dh6.6bn converted to tier II capital in first quarter of 2009) against loans of Dh111.071bn.

Emirates NBD's loan-to-deposit ratio improved last year to 118 per cent from 129 per cent in the previous year, but still far from the banking regulator's prescribed limits. The bank's loans grew 2.7 per cent in 2009 to reach Dh214.6bn from Dh208.9bn in 2008, while its deposits grew by more than 11.5 per cent to reach Dh181.2bn in 2009 from Dh162.3bn in the previous year.

First Gulf Bank increased its adjusted loan-to-deposit ratio to 105 per cent in 2009 from 107 per cent in 2008. Its total deposits stood at Dh86.4bn, after conversion of the Federal Government deposits of Dh4.5bn from customers' deposits to tier II capital.

"Banks are limiting their exposure to the realty sector as rating agencies were not quite happy with their exposure to realty. So the loans have come down significantly and banks are able to improve on their loans to deposit ratio," said an equity analyst with a local brokerage firm specifically tracking Emirates NBD and ADCB.

According to analysts, in spite of the banks' efforts to bridge the gap between loans and deposits, the gap stands at a whopping US$10bn at the end of 2009.

Nish Popat, head of fixed income, Middle East, ING Investment Management, said: "Over the past few years, loans by banks have increased and the [capital] debt market has suffered. However, in 2008, it's for the first time that the debt market has lent more money to corporate houses in the GCC than the banks. Banks will continue to lend to the corporate; this is the first step in the right direction."

When it comes to Islamic banks, many of them have managed to keep their loan-to-deposit ratios in lines with Central Bank's directives.

Dubai Islamic Bank (DIB) maintained a strong financing-to-deposit ratio of 78 per cent with customer deposits of Dh64.2bn as of December 31. Similarly, Abu Dhabi Islamic Bank's (ADIB) customer deposits grew by 36.7 per cent in 2009 after adjusting to Dh2.2bn of deposits that converted into tier II capital, resulting in customer financing to deposits ratio strengthening to 83.9 in 2009 against 91.2 in the previous year. – Emirates Business 24/7

UAE external credit hits 132% of GDP

The UAE has a net external creditor position well in excess of 100 per cent of GDP, among the largest in the International Monetary Fund's (IMF) membership, a recent IMF update on the country showed.

"This position is overwhelmingly with Abu Dhabi, especially as concerns liquid unencumbered external assets, but several of Dubai's government-related entities also have accumulated substantial assets abroad," the report highlighted.

According to the report, UAE's 2009 International Investment Position (IIP) stands at US$437 billion (Dh1.6 trillion) in assets and US$132bn in liabilities, resulting in a net positive position of US$305bn, or 132 per cent of gross domestic product.

This is substantially more than the comparative 2009 figures provided by the IMF for Norway (US$238bn, 52 per cent of GDP), Singapore (US$192bn, 105 per cent), Australia (-US$497bn, -50 per cent), and Bahrain (US$15bn, 83 per cent). At US$250,000, the UAE's net assets per national are remarkably better than the comparative set, with the second-best Norway way behind at US$50,000 per national, followed by Singapore (US$40,000), Bahrain (US$30,000) and Australia (-US$20,000