ABU DHABI, 6th February, 2018 (WAM) — Union National Bank, UNB, has recorded a net profit of AED1,657 million for the year 2017, up by five percent compared to the previous year. The net profit for the fourth quarter of the year was AED289 million, higher by 15 percent as compared to the same quarter of 2016.
The Board of Directors has recommended a dividend distribution of 20 percent, AED0.20 per share, of cash dividend subject to necessary approvals, the UNB said in a statement on Tuesday.
Commenting on the results, Mohammad Nasr Abdeen, Chief Executive Officer, UNB, said, “The UNB Group has recorded another year of satisfactory financial performance as the global economic outlook continues to improve. The Group’s focus has been to further expand its franchise, selectively pursue growth with emphasis on fee related business and prudent risk management.”
He added, “The Group expanded its presence both domestically and internationally, with the opening of new branches in the UAE and Egypt as also establishing a commercial branch in the People’s Republic of China, the first ever from a UAE based bank.”
According to the financial results, the operating profit for the year ended 31 December 2017 was AED2,496 million, up by six percent compared to the preceding year mainly due to an increase in operating income for the year 2017, an increase of four percent to AED3,631 million.
The growth in operating income was driven by an increase in non-interest income while net interest income increased modestly by one percent. The increase in net interest income was led by a growth in the average loan book partly offset by a reduction in net interest margin on account of increase in funding cost; the net interest margin for 2017 was 2.57 percent, lower by eight basis points compared to the last year.
The non-interest income in 2017 increased by 15 percent, to AED984 million, over the last year mainly due to an increase in fees and commission income driven by higher business volumes in Retail Banking business and gain on dealing in foreign currencies and derivatives. This increase was partially offset by recognition of a fair value loss on investment properties of AED27 million in 2017.
Net loans and advances were AED71.1 billion as at 31 December 2017, lower by four percent year-on-year due to certain loan repayments in wholesale banking segment and overall softer credit demand.
As part of active balance sheet management, the investment portfolio of the Group increased by 34 percent in 2017 to AED21.1 billion as at 31st December 2017. The total assets of the Group were AED107.5 billion as at 31st December 2017, higher by three percent as compared to the previous year end.
Customers’ deposits increased by two percent to AED78.7 billion as at 31st December 2017 compared to the previous year-end. The liquidity position of the Group remained strong with the liquid assets, including investments constituting 29.8% of the total assets as at 31st December 2017.
Other key liquidity measures remained sound with the loan to deposit ratio being 90.4% and the advances to stable resources ratio being circa 80 percent as at 31st December 2017. Also, the liquidity coverage ratio and the eligible liquid assets ratio were significantly above the required thresholds set by the UAE Central Bank.
Consistent with the prior year trends, the Group continued to efficiently manage its cost base with the operating expenses for 2017 at AED 1,135 million being broadly unchanged as compared to the prior year. As a socially responsible corporate entity, the Group made a contribution of AED 30 million in 2017 to Sandooq Al Watan, as UAE marked 2017 as the Year of Giving.
The cost to income ratio of the Group for 2017 was 31.3 percent, compared to 32.5 percent in 2016, continuing to be amongst the best in UAE banking industry.
During 2017, Fitch Ratings, Moody’s Investor Service and Capital Intelligence affirmed the ratings of UNB with a stable outlook.
