NBAD Reports 3rd Quarter 2015 Results

  • 3Q Net Profits AED 1.3 Billion; 4.2 Billion in 9M’15
  • 3Q Revenues up 1% to AED 2.6 billion; up 4% to AED 8.0 billion in 9M’15
    Continued strength in Wholesale flow products, Retail & Commercial and International; offset by challenging market and liquidity conditions
  • Customer Loans up 7% y-o-y and down 3% sequentially to AED 212 billion
  • CASA Deposits grew 3% y-o-y and now represent 30% of Deposits
  • Strong Capital Ratios with Tier-1 at 15.6%
  • Return on Equity (RoE) at 14.0% for 9M’15

NBAD reported net profits of AED 1.326 billion in 3Q’15, down 3% year-over-year and 8% sequentially. Net profits for 9M’15 were AED 4.196 billion, relatively flat versus 9M’14. This represents higher diluted EPS of AED 0.77 for 9M’15 versus AED 0.76 for 9M’14.

In the 3rd quarter, underlying growth in key businesses was partially offset by the continuation of challenging market and liquidity as net profits declined both year-over-year and sequentially. Expenses were in line with expectations and relatively flat whilst credit quality remained strong. From a balance sheet perspective, core client deposits grew sequentially and government deposits remained relatively flat, leading to an improvement in liquidity.

The Bank’s return on equity (RoE) of 14.0% in 9M’15 has been impacted by the market challenges faced by the Bank, and is below the medium-term target of 15%.



H.E. Nasser Alsowaidi Chairman of NBAD, said, for the first nine months of 2015, NBAD has delivered solid profits in a challenging environment. During this period of market volatility and tighter liquidity, the Bank has continued to adhere to strong balance sheet management whilst maintaining a robust capital position.

In the 3rd quarter, NBAD was once again recognised as the Safest Bank in Emerging Markets, Safest Bank in the Middle East and one of the 50 Safest Banks in the World by Global Finance Magazine.

Independent accolades such as these in addition to the Bank’s high credit ratings are a testament to the strength of NBAD.

The Board and I continue to monitor the Bank’s strategic progress and to ensure that actions are taken to address current market challenges as and when required. We are confident that the Bank has the right long-term stategy in place, and we are confident that our management team will successfully execute against this strategy.

I believe we are well positioned to continue to deliver solid results in 2015 and beyond.

Alex Thursby Group Chief Executive, said, Our 3rd quarter results reflect growth in our key businesses while also reflecting the challenging environment in which we find ourselves. We continued to generate solid results in our Global Wholesale flow products, Retail & Commercial and International businesses. In Global Markets, our business was adversely impacted by more challenging market and liquidity conditions. It is worth noting that despite experiencing a decline in government deposits, our overall deposits grew, reflecting our ability to attract deposits from core clients, particularly in the International business. Our expenses were in line with expectations and essentially flat for the third quarter in a row, and we will continue to implement very disciplined cost control going forward. Our return on equity (RoE) remains attractive at 14.0% for 9M’15, and I believe it will continue to be below our medium term target of 15% while these difficult market conditions persist.

As we look forward to the remainder of 2015, we remain focused on executing against our strategy and ensuring that we provide our clients with the best possible service and guidance during these challenging times. As always, we will maintain our strong risk management, and we will continue to build and invest in the spine of the business.

While we are confident we have the right strategy in place and are very bullish on the long term prospects of both NBAD and the UAE, I believe it is important to recognise that we appear to be entering a ‘new normal’ environment of lower oil prices and more difficult market conditions over the medium-term.

During times like these, it is important to remain cautious and prudent, and our recent ranking as the safest bank in emerging markets and the Middle East are evidence of our continued ability to do just that. As we enter the final quarter of this year and look forward to 2016, I am confident that we will continue to generate solid growth and returns for our shareholders whilst also maintaining our position as one of the world’s safest banks.


Overall growth is expected to slow slightly in 2015 as the global economy faces challenging macroeconomic headwinds and continued market volatility. In the US, the dollar has strengthened considerably, and many underlying factors are showing signs of improvement as lower energy prices are expected to boost consumer spending. A combination of mixed economic data throughout the year has led to a further delay in Fed action, and a hike in rates is now expected by many to be delayed until 2016. The Eurozone has recovered quicker than expected as monetary easing and declining energy costs have provided a boost. In China, growth is expected to slow as structural reforms, strict regulations and policy actions continue.

The GCC countries continue to appear to be better prepared than many other oil-exporting nations, given their combination of relatively high levels of net foreign assets and low debt-to-GDP ratios. Government spending in these countries is expected to remain healthy, albeit at lower levels, and the region continues to benefit from the stability of having its currencies pegged to the US dollar. The prolonged decline in oil prices has led the GCC governments to re-evaluate their spending priorities.

In 2015, the UAE is facing challenges including lower oil prices, tightening liquidity in the banking sector and continued market volatility. The country has demonstrated leadership and a willingness to take proactive steps to addressing lower oil prices including the recent reduction of energy subsidies. Despite tough market conditions, UAE economic growth is proving to be robust, and the country remains well prepared for the possibility of a continuation of lower oil prices. In fact, non-oil and gas activities are expected to constitute around 75% of nominal GDP in 2015 as the country continues to diversify away from its reliance on hydrocarbons. In 2016, similar growth levels are expected to be driven by non-oil activity, the lifting of sanctions to Iran and a reduced budget deficit.



Global Wholesale Banking experienced growth in flow products which was offset by continuing market and liquidity headwinds. Revenues declined 2.5% y-o-y in 3Q 2015, driven by lower non-customer income in Global Markets and ongoing margin compression in Global Banking. Lending growth decreased in 3Q due to lower trade finance lending and an overall more conservative balance sheet management approach. Efforts towards diversification of income gaining strength as evidenced by an improvement in the non-funded income contribution.
During the quarter, asset quality remained strong.

Highlights from 3Q 2015 include:

  • GCC Bonds – Ranked #1 Bookrunner by Dealogic and #2 by Bloomberg
  • MENA Loans – Ranked #3 by Bloomberg and #5 by Dealogic
  • MENA Bonds – NBAD is ranked #4 Bookrunner by both Dealogic and Bloomberg
  • International Sukuk – NBAD is ranked# 5 Bookrunner by both Dealogic and Bloomberg


Global Retail & Commercial delivered strong y-o-y revenue growth of 13.4% in 3Q, with growth coming from the UAE & Gulf. In the 3rd quarter, lending growth continued, CASA balances increased and branch sales productivity improved. The bank continued to invest in enhancing the customer experience through refurbishing the branch network, launching mobile banking and enhancing automation and e-channels.

Highlights from 3Q 2015 include:

  • NBAD Real Madrid Card won the Best Co-brand Card at the recent MasterCard Global Innovation Forum held in Kuala Lumpur
  • Co-brand partnership with Al Futtaim group launched
  • Continue to gain market share in credit cards
  • Revamped 25 branches and opened 2 new branches in the UAE


Global Wealth revenues were down by 9.4% in 3Q y-o-y due to challenging market conditions, partially offset by strength in Global Private Banking. Wealth experienced strong performance within its international operations in London and Switzerland where it continues to benefit from the strength of NBAD’s proposition to its high and ultra-high net worth clients. Low oil prices, weak economic data in developed and emerging economies, and risk averse investor sentiments have had significant negative impact with resultant declines in trading volumes and correction in financial markets witnessed in both regional (MENA) and other markets globally. This has acted as a significant headwind to our Global Wealth business, particularly within Securities and Asset Management businesses.

Highlights from 3Q 2015 include:

  • SCA approved NBAD as UAE’s first Securities Lending and Borrowing Agent
  • Expanded custody network to include China for ‘A’ and ‘B’ shares
  • NBAD Securities achieved 8.6% market share

Net interest income (including income from Islamic financing) (NII) was AED 1.834 billion in 3Q’15, up 2% y-o-y and flat sequentially assisted by improvements in asset quality. For 9M’15, NII was AED 5.463 billion representing 7% y-o-y growth driven by lending growth.

Non-interest income declined 1% y-o-y and 13% sequentially to AED 763 million in 3Q’15; 9M’15 non-interest income was AED 2.536 billion, flat y-o-y.

  • Net fees and commissions for the quarter were AED 492 million, down 13% y-o-y and 12% sequentially. A slowdown in lending along with lower market-related brokerage fees drove the decline sequentially in 3Q’15. The 7% y-o-y decline was due primarily to market-related slowdowns in investment & brokerage fees in 9M’15.
  • FX and investment income was AED 270 million, up 37% y-o-y and down 5% sequentially. In 9M’15, FX and investment income grew 24% to AED 904 million, reflecting strong growth in the bank’s customer sales franchise as well as gains on the sale of investment securities. The sequential decline was due primarily to fluctuations in market volumes and activity.
  • Other operating income was AED 1 million in 3Q’15 and AED 62 million in 9M’15.


Operating expenses for the quarter were AED 1.017 million, essentially flat sequentially and up 9.4% year-over-year. In 9M’15, expenses were AED 3.044 billion, representing growth of 18% y-o-y. Expense growth has moderated since year-end as anticipated and is expected to continue around this level for the remainder of 2015. The primary contributor to expense growth has been our investment in hiring world-class talent, expanding client service capabilities and enhancing the IT infrastructure of the business. The impact of these investments is evident in revenue growth in key targeted areas, including Global Wholesale flow products, Retail & Commercial and International. The cost to income ratio was 38.1% for 9M’15, up slightly from 37.5% for 1H’15. In 3Q’15, the ratio increased slightly to 39.2%.


Net impairment charges continue to reflect strong asset quality, recovery in collateral values and prudent risk management processes. Net charges in 3Q’15 were AED 171 million, up 3% sequentially, but down 16% year-over-year. For 9M’15, the impairment charges were lower by 24% to AED 507million.

Cost of risk* was stable at 31bps for both 3Q’15 and 9M’15. We expect a gradual increase in the cost of risk going forward over the medium term given the challenging environment.

In 3Q’15, the Bank set aside a further AED 121 million as collective provisions in line with growth in risk-weighted assets. Since the end of 2011, the Bank has been fully compliant with the Central Bank of UAE’s minimum requirement of 1.5% for collective provisions, which has become mandatory as of year-end 2014.

Non-performing loans decreased by AED 119 million in 3Q’15 to AED 5,725 million. As of 30 September 2015, NPL ratio stood at 2.62% of the loan book. Total provisions represented 115% of non-performing loans.


  • Assets were a record AED 405 billion at the end of 9M’15, up 2% y-o-y and 3% sequentially.
  • Net Loans and advances were AED 212 billion, down 3% sequentially as trade finance lending decreased in the 3rd quarter. However, lending has grown 7% y-o-y as we have used our balance sheet strength to continue to support clients despite the tighter liquidity environment.
  • Customer accounts and other deposits were AED 235 billion, down 11% year-over-year as a decline in government deposits was partially offset by increases in core client deposits, particularly from our international operations. Sequentially, deposits were up 2% as we continued to grow our core client deposits. CASA grew 3% y-o-y to AED 71 billion, representing 30% of total accounts.
  • Equity, consisting of shareholders’ funds of AED 35.3 billion, GoAD Tier-I capital notes of AED 4.0 billion and Tier-1 capital perpetual notes of AED 2.75 billion ($750 million additional raised in 2Q‘15), grew by 13% y-o-y and 1% sequentially to AED 42.0 billion at the end of 3Q’15. The increase was attributable to the issuance of Tier 1 capital notes in 2Q’15 along with increased retained earnings.
  • Basel-II ratios, in accordance with UAE Central Bank’s framework, remain strong and well above the minimum 12% and 8% (Tier-I), with a capital adequacy ratio of 16.5% and a Tier-I ratio of 15.6% as of 30 September 2015.
  • Liqudity & Funding: The Bank’s liquidity position remains robust and has improved on a sequential basis. These improvements have been driven by a slight drop in our loan portfolio coupled with growth in our non-government deposit base, which is in line with our funding diversification strategy. Additionally, the Bank is committed to supporting the CB-UAE in its implementation of the Basel-III liquidity ratios and will be looking to transition to these ratios at the earliest possible opportunity.

About NBAD

The National Bank of Abu Dhabi (NBAD), the leading bank in the Middle East and one of the 50 safest banks in the world, has one of the largest networks in the UAE as well as branches and offices in 18 countries stretching across five continents from the Far East to the Americas.

A comprehensive financial institution, NBAD offers a wide range of banking services and products to all segments of clients. NBAD grows strategically toward its vision to be recognised as the World's Best Arab Bank.

Since 2009, NBAD has been ranked one of the World's 50 Safest Banks by Global Finance magazine, which also ranked NBAD the Safest Bank in the Emerging Markets and Middle East.

NBAD is rated senior long term/short term AA-/A-1+ by Standard & Poor's (S&P), Aa3/P1 by Moody's, AA-/F1+ by Fitch, A+ by Rating and Investment Information Inc (R&I) Japan, and AAA by RAM (Malaysia), giving it one of the strongest combined rating of any global financial institution.

For further information, please contact:

Michael Miller
Head – Investor, Media & Public Relations

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