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Key Highlights
Loans and advances up by 2% on year on year basis to AED 68.3 billion as at 31 March 2016
Customer deposits increased by 3% on year on year basis to AED 72.1 billion as at 31 March 2016
Consolidated total assets of AED 99.8 billion as at 31 March 2016, up by 2% on year on year basis
Liquidity levels managed actively with loan to deposit ratio at 94.7% and advances to stable resources of around 85% as at 31 March 2016
Effective cost management with cost to income ratio of 32.2% for the first quarter of 2016
Slight uptick in asset quality metrics, with NPLs to gross loans ratio of 3.7% and loan loss coverage of 102.7% as at 31 March 2016
Strong capital ratios with overall and Tier 1 capital adequacy ratios of 18.9% and 17.8% respectively as at 31 March 2016
Financial Review
Union National Bank (UNB), one of the leading banks based in the United Arab Emirates, recorded a profit of AED 450 million for the first quarter of 2016, up by 131% over the preceding quarter and down by 27% year-on-year.
Commenting on the results, Mr. Mohammad Nasr Abdeen, Chief Executive Officer, Union National Bank said "2016 witnessed a soft start to the year as global economic activity moderates and the operating environment continues to re-adjust at the back of a decline in oil prices. The local banking sector is facing headwinds, which also saw some impact on the Group's profitability". He further commented that "While maintaining a prudent strategy we continue to maintain strong capital levels and adequate liquidity".
The operating profit for the first quarter of the year was AED 551 million, a decrease of 19% over the same period of prior year. The operating income for the three month period ended 31 March 2016 was down by 13% to AED 813 million compared to the corresponding period of previous year.
The increased cost of deposits led to a reduction of the net interest income by 12% to AED 623 million in Q1-2016, with the net interest margin being impacted by 50 bps to 2.63% in the first quarter. The selective approach in booking new assets led to a drop in net fee and commission income, which along with lower net gains from dealing in foreign currencies and derivatives resulted in lower non-interest income.
Balance sheet
Loans and advances were up by 2% year-on-year to AED 68.3 billion as at 31 March 2016 and were marginally lower compared to the prior year end. The investment portfolio increased by 6% year-on-year to AED 15.3 billion as at 31 March 2016 partly to comply with the liquidity norms. The total assets of the Group registered a growth of 2% to AED 99.8 billion as at 31 March 2016 as compared to last year.
Customers' deposits were AED 72.1 billion as at 31 March 2016, registering an increase of 3% compared to the corresponding period in the previous year. The Group's liquidity position remains comfortable with the liquid assets, including investments constituting 27.0% of the total assets as at 31 March 2016 (31 March 2015: 27.0%). The loan to deposit ratio was 94.7% as at 31 March 2016 and the advances to stable resources ratio at around 85% well within the stipulated thresholds. The Bank has been complying consistently the regulatory requirement of Eligible Liquid Assets ratio which came into effect from the second half of last year.
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© Press Release 2016
