The turbulent events witnessed by the financial services industry during the later part of 2008, forced the banking industry across the globe to rethink its strategy and adopt a cautious approach. Accordingly 2009 has been a year of consolidation and in spite of the economic downturn witnessed; the Bank registered a net profit of AED 341 million for the year with a 20% growth compared to the net profit of AED 283.6 million for the year 2008. The earnings per share increased to 23 fils compared to 20 fils as at end of 2008. The Operating income of AED 537 million in 2009, recorded a 38.9% growth compared to the 2008 figure of AED 386.7 million. As a result of the diversification of the investment portfolio from equities to Fixed income debt securities and bonds together with increase in valuations of the GCC stock markets, Investment losses dropped to AED 37.5 million in 2009, compared with the losses of AED 85.5 million in 2008. Total provision for impaired assets net of recoveries amounted to AED 158.5 million (2008: AED 17.5 million).
Total assets increased to AED 13.885 billion as at 31st Dec 2009 compared to AED 13.543 billion as at 31st December 2008, while the shareholders’ funds increased by 8.3 % to AED 3.012 billion as at 31/12/09, compared to AED 2.782 billion as at 31/12/08.
The financial turbulence triggered by the fallout from the U.S. sub-prime mortgage crisis, saw wide spread action by Central Bankers as well as National and International bodies addressing the issue with comprehensive and coordinated measures, including induced stimulus packages aimed at restoring confidence in the Economy. While this has led to short term demand, and reducing the speed of economic slowdown, global market players feel that perceivable growth could only be achieved by increased consumer spending and further improvement in market confidence. On the back of signs of recovery in the global economies and the expected increase in demand for petroleum products, the GCC is expected to stage full recovery in 2010. The developments in the infrastructure and real estate sectors seem to have reached a saturation level with limited growth potential and as a result, the asset and real estate prices are expected to consolidate and recover during 2010.
On the domestic front, liquidity support, provided by the Government of the UAE in conjunction with the Central Bank of the UAE facility, along with right sizing of the asset size enabled banks to overcome liquidity crunch. With stock markets, assets and oil prices turning volatile, the future of the economy is being looked upon with positive but cautious optimism.
Bank’s Paid up Capital increased to AED 1.452 billion in 2009 from AED 1.320 billion as at end of 2008 due to 10% bonus share declared for the year 2008. With the shareholders equity now at AED 3.012 billion, the Capital Adequacy ratio is 27.8%, well over the minimum 11% stipulated by the UAE Central Bank and the Tier 1 ratio is 22.8% well over the minimum 7% stipulated by the UAE Central Bank. In order to strengthen the equity further and retain profits earned, the Board has recommended an 8% stock dividend and 12% cash dividend for 2009. As a part of its corporate social responsibility, the Bank continues to provide support for the community initiatives and actively participates in the charitable and humanitarian and sporting endeavors.
I would like to state my appreciation for the ongoing initiatives and support of the UAE Central Bank to regulate the country’s financial sector, and for their helpful guidance to NBQ during this year. Equally important has been the steadfast confidence of our shareholders, the loyalty of our customers and business partners; and the dedicated efforts of our management and staff. Together they have contributed to the success of NBQ and continue to provide us with the strength and determination to face all future challenges.
SAUD BIN RASHID AL-MOALLA
Chairman
