Business & Finance Club - Abu Dhabi: National Bank of Abu Dhabi has reported net profits of Dh2.03 billion for the first half of 2010 — up 21.1 per cent on the Dh1.67 billion in the same period last year.

The bank, the UAE's largest bank by market capitalisation, posted a 10.4 per cent rise in second-quarter profit of Dh1 billion, compared with Dh907 million in the second quarter of 2009.

The higher interest income and lower provisions beat analysts' estimates.

NBAD Group Chief Executive Michael Tomalin said: "These are a strong set of results in difficult markets reflecting the resilience and strength of the bank". NBAD's non-performing loans in the first six months of 2010 increased by Dh386 million to Dh2.07 billion.

On a portfolio of Dh135 billion, this represented an NPL ratio of 1.5 per cent. Net impairment charges for the second quarter were Dh238 million, and Dh463 million for the first half of 2010.

Al Futtaim HC Securities senior analyst Germaine Benyamin said: "NBAD's results are within our projections. Net profits were six per cent higher than our estimates".

"We think this is largely due to the bank reporting lower provisions in the second quarter.

"We expect the provisions to be higher in the third and fourth quarters," Benyamin said.

Total assets

The bank's total assets rose 11.4 per cent in the first half to Dh202 billion over the same period last year.

Deposits were Dh112.2 billion on June 30, after reclassifying the Dh5.6 billion Ministry of Finance deposits to Tier 2 capital in 2010. Loans and advances grew by 8.7 per cent in the first half to Dh135 billion, up from Dh124 billion in the corresponding period.

Net interest income for the first half rose 16.3 per cent to Dh2.5 billion compared with the corresponding period in 2009, and fees and other non-interest income increased by 11.6 per cent to Dh1 billion.

The second-quarter net interest income advanced 18 per cent to Dh1.2 billion from a year ago, while free and commission income grew four per cent to Dh304.6 million.

Net interest margins for the first half were at 2.53 per cent — slightly above the 2.50 per cent for the corresponding period in 2009. Operating income reached Dh3.5 billion, 14.9 per cent up on the Dh3.1 billion in June 2009.

Operating expenses in the first half increased by 15.2 per cent to Dh1 billion, compared to the corresponding period.

The cost-to-income ratio of 28.3 per cent was still low by international standards and lower than the 35 per cent cap on the cost-to-income ratio the group expected to be maintained in the medium term.