NBAD Reports 3Q / 9M 2016 Results

3Q’16 Net Profits of AED 1.320 Billion
Cumulative profits in 2016 for first nine months at AED 3.967 Billion

3Q’16 Revenues of AED 2.684 Billion

Continuing underlying strength in Retail & Global Wholesale flow products

Disciplined Expense Management: JAWS up 5% y-o-y in 3Q’16

Customer Loans of AED 205 Billion: down 3% y-o-y, up 1% sequentially

UAE Retail lending up 15% y-o-y, continuing to outpace market

Strong Liquidity: Loans-to-Deposit ratio 85%
International contributed 35% of total deposits; CASA 30% of total


National Bank of Abu Dhabi (NBAD) reported net profits of AED 1.320 billion for 3Q’16, flat year-over-year (y-o-y) and down 4% sequentially. During the period, strong underlying growth trends and solid investment income were offset by a seasonal slowdown and ongoing challenging market conditions.

For 9M’16, net profits were down 5% y-o-y due to lower investment gains and higher impairment charges , despite growth in strategic businesses and overall stronger operating profits.

Expenses were down 2% y-o-y and down 1% q-o-q in 3Q’16 as the Bank continues to tightly control expenses whilst also investing in talent, operations and infrastructure.

Loans were AED 205 billion, up 1% sequentially and down 3% y-o-y. Lending growth in 3Q’16 was led by Global Wholesale, while Retail lending grew both q-o-q and y-o-y. CASA improved 4% on a y-o-y basis while the Bank continued to attract more deposits from our international clients.

In 3Q’16, the Bank continued to maintain its strong liquidity and robust capital positions, with a Tier-1 ratio of 15.8% and strong credit ratings.

Return on Shareholders’ Funds (RoSF) in 3Q’16 and 9M’16 was 13.4% as it continues to be impacted by challenging market conditions.



“NBAD continues to perform well, with strong underlying growth and disciplined cost management being two highlights this quarter. As we progress towards our merger with FGB, it is vital that we maintain stability of funding and consistent growth of the core business, which I am confident we will achieve.Our merger with FGB is progressing well. A new leadership team has been appointed for the combined bank, and we are beginning to put in place the strategy which will ensure continued growth and enhanced value for all of NBAD’s stakeholders going forward.”

“We delivered a solid set of results in the third quarter reflecting continued underlying strength in our core businesses. We achieved this performance during a period of seasonal slowdown and ongoing challenging market conditions, whilst we continued to maintain expense discipline along with strong capital and liquidity positions. Looking ahead to the rest of the year, we are aiming to continue to deliver solid underlying net profit growth while maintaining our conservative risk profile. The core businesses will continue to drive growth, and we expect to cross a number of important integration milestones in the merger with FGB, which is on track to complete in the first quarter of 2017.”



Global Wholesale Banking (GWB) delivered revenue growth of 5% y-o-y in 3Q’16 buoyed by growth across strategic flow businesses as transformation towards an originate to distribute model for core customers continues to take effect. Sequentially, revenues were down 3%, reflecting seasonal volatility and softness in the relationship loan market. Disciplined expense management, with a focus on efficiency, saw costs decline 4% y-o-y with a marginal increase of 1% sequentially in the quarter.

GWB’s balance sheet remains strong with customer deposits increasing 10% y-o-y as we continue to utilise our Wholesale network to increase liquidity. Despite challenges, loan growth increased marginally by 2% q-o-q, while the y-o-y decline of 5% was influenced by the Bank’s move away from FI Trade (Financial Institutions Trade lending) towards higher yielding assets.

Global Banking’s continued focus on its Cash Management proposition drove liquidity improvement of 12% y-o-y and 9% q-o-q.

Global Markets Sales continued to maintain revenue momentum with a focus on providing quality yield solutions for financial institutions, non-banking financial institutions and corporate customers as well as increasing flows across locations. The diversified nature of the business ensured that the flow trading and Investment book’s performance helped weather the heightened market volatility and credit conditions.

Highlights from 3Q’16 include:

  • “Most Innovative Investment Bank in the Middle East” by The Banker – NBAD is the first ever regional bank to win this prestigious award recognising our strengths in bonds, loans and Sukuk
  • Best Treasury and Cash Management Provider in the Middle East by Global Finance
  • “Best Sukuk House of the Year 2016” in the Global Islamic Finance Awards. NBAD won this same award in 2015 and is first ever winner in successive years.
  • Significant DCM deals on which NBAD was Joint Bookrunner:

- State Bank of India - $300m AT1 30NC5 – first ever international hybrid capital offering from India & NBAD’s maiden bond mandate from India

- Burgan Bank - $500m 5yrs senior bond – first ever senior bond issue by a Kuwaiti financial institution

- Emaar Properties - $750m 10yrs Sukuk – lowest ever coupon on a Sukuk from a UAE corporate issuer

- Sultanate of Oman - $1.5b reopening of 2021 + 2026 bonds – largest ever tap issue by a GCC name

Global Retail and Commercial (GRC) 3Q’16 revenues grew 4% y-o-y, mainly driven by retail product sales and commercial trade business in the UAE. On a sequential basis, revenues were lower by 5% due to lower interest in suspense (IIS) recoveries. Operating expenses in 3Q’16 continue to be well managed, declining 8% y-o-y and 2% q-o-q.

Retail lending grew 13% y-o-y (15% y-o-y in the UAE) and 2% q-o-q, backed by strong sales performance and customer acquisition, particularly in mortgages. Robust growth in Commercial trade revenues contributed to higher interest and FX income.

During the quarter, restructuring of the SME business was completed with stronger risk controls put in place and proactive management of the existing loan programs and working capital portfolio by Relationship Managers. GRC also revamped its Operational Risk framework and fully integrated the credit bureau process across the business.

Highlights from 3Q’16 include:

  • Successfully launched the newly designed Retail online banking system for customers in August 2016 with enhanced functionality and simplified access
  • E-Dirham, MoF’s national electronic payment system, launched with NBAD as a banking partner, received the “Special Merit Award” for Government to Business and Customer (G2BC) Engagement from Terrapin Middle East during the Cards and Payments Middle East 2016 event
  • Launched reward and recognition campaign within Commercial to encourage and incentivise sales lead referrals and cross-sell initiatives
  • NBAD was the Presenting Partner of SME Beyond Borders Oman conference for the second year running


Global Wealth revenues in 3Q’16 were down 4% sequentially to AED 224 million following challenging market conditions and FX depreciation which continue to impact the revenues of the business on a year-to-date basis as well (down 12% in 9M’16 vs 9M’15). Resultant declines in local trading volumes and market volatility continue to impact the Securities and Asset Management businesses in 2016. The Global Private Banking business continues to generate underlying growth as it continues to build momentum with strong client acquisition and successful diversification of its client base and remains focused on its strategy to be the best private bank in the Arab world.

Highlights from 3Q’16 include:

  •  NBAD MENA Dividend Leader and NBAD MENA Bond Fund continue to be largest mutual funds in our tracked peer groups
  • NBAD Securities achieved 8.2% of market share during that time with AED 5bn of traded value

UAE Private Bank, Global Asset Management & NBAD Securities businesses continue winning key industry awards


Net interest income (including income from Islamic financing) (NII) was AED 1.807 billion in 3Q’16, down 2% q-o-q and 1% y-o-y. Decline in NII was due to lack of lending growth coupled with higher interest expenses, both q-o-q and y-o-y.

Net fees and commissions (F&C) for the quarter were AED 512 million, down 16% sequentially and up 4% y-o-y.The decline in 3Q’16 vs 2Q’16 was primarily due to a seasonal slowdown in fees earned on corporate and retail lending. At the same time, continued strength in fee income on derivatives in Global Markets is evident as its contribution to net F&C has increased from 2% in 9M’15 to 7% in 9M’16.

FX and investment income was AED 357 million in 3Q’16, up 16% sequentially and 32% y-o-y, reflecting higher investment gains.

Other operating income was AED 8 million in 3Q’16, while the decrease in 9M’16 to AED 22 million from AED 62 million in 9M’15 was due primarily to one-time gains recorded in 2Q’15.



Net impairment charges in 3Q’16 were AED 287 million, up 68% y-o-y and down 4% q-o-q. The Bank’s impairments are reflective of the ongoing challenging operating environment. Results are in line with guidance and continue to reflect NBAD’s prudent provisioning approach.

Cost of risk (CoR) (annualised) was 54bps in 3Q’16, roughly in line with 1Q’16 (54bps) and 2Q’16 (57bps), and up y-o-y from 31bps in 3Q’15 as the Bank manages through a more challenging credit environment. CoR for 9M’16 was 55bps, in line with guidance for 2016.

Collective provisions continue to be maintained above the Central Bank of UAE’s minimum requirement of 1.5%.

Non-performing loans, net of interest in suspense, were marginally higher by AED 8 million at the end of 3Q’16 to AED 5.773 billion. NPL ratio at the end of 3Q’16 was 2.73% of the gross loan book.

Total provisions were AED 6.342 billion and represented 110% of non-performing loans.


  • Assets were AED 415 billion at the end of 3Q’16, down 1% sequentially, but up 2% year-to-date (ytd).
  • Net Loans and advances were AED 205 billion, up 1% sequentially and flat year-to-date (ytd). Y-o-Y decline of 3% in lending was driven partially by the Bank’s move away from FI Trade towards higher yielding assets as part of its ongoing balance sheet optimisation.
  • Customer accounts and other deposits were AED 243 billion, flat sequentially and up 4% ytd on increase in core client deposits, generated in large part due to the strength of our international business and execution of our strategy. CASA was AED 74 billion, down 1% sequentially and up 4% y-o-y, representing 30% of total customer accounts and deposits.
  •  Equity, consisting of shareholders’ funds of AED 38.2 billion and perpetual Tier-I capital notes of AED 6.75 billion, was up 4% q-o-q and ytd; up 7% y-o-y at the end of 3Q’16.
  • 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 17.0% and a Tier-I ratio of 15.8% as of 30 September 2016.
  • Liquidity & Funding: The Bank’s liquidity position and Loan-to-Deposit ratio remain strong. The Bank is continuing its focus on diversification and extending the liability profile, and has continued to execute selective private debt transactions in 3Q’16. In early October, the Bank issued its first Formosa bond (USD bond listed in Taiwan) structuring it as a multi-callable zero coupon bond for an amount of USD 696 million with a maturity of 30 years. This was a successful landmark issuance, demonstrating NBAD’s prominent position and innovative approach amongst MENA issuers to raise funding from new investors in new geographies.

    The Bank is pleased to announce that it has become the first regulated entity within the UAE to gain approval from the Central Bank of UAE to formally adopt the LCR (Liquidity Coverage Ratio) in the 4th Quarter as its official liquidity regulation.



Following the Bank’s announcement of plans to merge with FGB last quarter, all 3 major rating agencies – Moody’s, S&P and Fitch Ratings – affirmed NBAD’s current ratings.

The Bank’s long term ratings continue to be amongst the strongest combined ratings of any global financial institution, and NBAD is ranked among the World’s 50 Safest Banks in addition to being ranked as the Safest Bank in Emerging Markets by Global Finance.

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