The National Bank of Abu Dhabi (NBAD) earned AED 2.829 billion for the half ended 30 June 2014, up 7.9% over first half of 2013. In 2Q 2014, net profits were AED 1.424 billion, up 1.3% sequentially and 17.5% year-over-year. Results for both periods reflect improvement in underlying fee income and continued expense discipline. Diluted EPS was AED 0.56 for 1H 2014, up 6.8%.
The annualised return on average equity for 1H 2014 was 16.0%, down from 16.6% in 1H 2013.
H.E. Nasser Alsowaidi, Chairman of NBAD said, “In the second quarter of 2014, NBAD continued to generate solid momentum across business lines. The Bank’s results reflect continued strength in underlying revenue and earnings growth. As we enter the second half of 2014, NBAD will continue to focus on generating long-term growth whilst maintaining its strong balance sheet and solid capital position.”
Mr. Alex Thursby, Group Chief Executive said, “Our results in the second quarter of 2014 provide further evidence that our strategy is working. We are seeing positive underlying trends across our businesses, particularly our fee generating businesses. I expect these trends to continue in the second half of the year and in the years to come. Every day, we are executing against our strategy and becoming more ‘core to our chosen customers’, generating significant wins and building substantial pipelines with clients in both the private and public sectors. At the same time, the strength of our balance sheet remains at the top of our priority list, and we are focused on maintaining strong liquidity and capital positions.
I am very pleased with the progress we have made over the past year since I joined the bank. We have made a number of transformational changes in our organisational structure and our strategic approach, and we are just starting to see the impact of these changes flow through in our results.
We are beginning to work as one team in major transactions and significant deals, we are establishing stronger government relations in areas such as cash management services, and we are in the process of expanding in the UK and Asia. I expect the improvements we are beginning to see will continue to drive long-term business momentum and increases in revenue and profitability going forward.
As we enter the second half of the year, I am confident that we will continue to execute against our strategy and achieve sustainable growth over time,” Mr. Thursby concluded.
ECONOMIC OVERVIEW
The first half of 2014 has generally been positive and supported by strong economic data as stock markets have reached record levels. However, the Eurozone is slowly approaching worryingly low levels of inflation as producer prices fell consecutively during 2Q 2014, and ECB is considering buying assets if low inflation persists. IMF director summarises the current situation as “Cautious Optimism” and believes the global economy will maintain its slow recovery trajectory, supported by accommodative monetary policy. Financial reforms have been initiated but not fully implemented.
While risks to growth are still present, they seem to be diminishing. Looking forward, emerging markets are expected by many economists to register stronger growth performance in comparison to advanced economies in the coming years. The UAE, which has the 2nd largest economy in the Arab world and 29th largest GDP in the world, recently became part of the MSCI Emerging Market Index in June 2014, and has continued to benefit from its safe haven status during periods of instability in the region. The economy has shown signs of resilience amidst global and regional uncertainty and is beginning to generate returns from its diversification efforts. Last year, the non-oil sector constituted 61% of nominal GDP, with strength coming from real estate and transport/communication. Over time, the objective is to continue to increase the contribution from the non-oil sector to the overall UAE economy.
