Emirates NBD delivered a strong set of financial results with net profits up 58% to Dh5.1 billion in 2014. The strong operating performance was helped by all parts of the business delivering year-on-year revenue growth.
These results have enabled the Board of Directors to recommend an increase in the 2014 dividend to 35 fils from 25 fils per share.
Total Income for the year 2014 grew by 22% to Dh14.4 billion. Net interest income grew 17% to Dh9.5 billion as asset growth was focused on higher margin Retail and Islamic products, whilst the Bank's liability profile improved thanks to current and saving account growth.
Non-interest income grew 33% to Dh4.9 billion boosted by increased income from trade finance, foreign exchange and brokerage and asset management business as well as gains from the sale of property and investments.
The bank's balance sheet strengthened further in 2014 thanks to an improvement in the capital, liquidity and credit quality ratios. The bank's Impaired Loan ratio improved significantly to 7.8% in 2014. This improvement was due to the bank's reclassification of its Dubai World exposure, the writing-off of fully provided retail loans and an increase in recoveries and repayments on the back of an improved economy.
Further conservative provisioning of Dh5.0 billion helped boost the Impaired Loan Coverage ratio to 100.3%, reaching the bank's target coverage level.
The Capital Adequacy ratio improved by 1.5% to 21.1% due to retained profits. The ability of the bank to attract and retain stable deposits helped improve the Advances to Deposit ratio by 4.3% to 95.2%.
Commenting on the Group's performance, Sheikh Ahmed bin Saeed Al Maktoum, Chairman, Emirates NBD, said, "2014 was a momentous year for Emirates NBD as we reached a number of key milestones. I would like to thank His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, for his vision, guidance and support that have greatly contributed to the success of Emirates NBD and Dubai.
"We are the first bank in the UAE, and for the first time in our 50 year history, to report an annual Operating Profit before Impairment in excess of Dh10 billion. This strong operating profit, coupled with conservative provisioning, has enabled Emirates NBD to reach 100% coverage ratio for impaired loans and successfully put legacy issues behind us. It is particularly pleasing that all the Group's business units delivered a strong performance in 2014. As a leading bank in the region, we are well placed to take advantage of future growth opportunities in Dubai, the UAE and the Gulf region. In light of the strong performance by the bank, we are proposing to increase the cash dividend to 35 fils per share." During 2014, expenses amounted to Dh4,389 million, an increase of 5% over the previous year. The cost to income ratio improved by 5% y-o-y to 30.4%, as improving top line momentum more than offset the increase in costs. Excluding one-offs, the cost to income ratio would have been 31.3%.
In 2014 the Impaired Loan ratio improved to 7.8%. The 2014 impairment charge increased to Dh4,995 million.
Deposits increased by 8% and gross loans grew by 3% during 2014. Gross loans grew by 5% if we exclude the write-off of fully provided for retail loans. The Advances to Deposits Ratio strengthened by 4.3% in 2014 to finish the year at 95.2%, thanks to the bank's on-going ability to attract and retain economical current and saving account deposits.
As at 31st December 2014, the bank's capital adequacy ratio and Tier 1 capital ratios were 21.1% and 18.0% respectively. The 2.7% improvement in the Tier 1 ratio recorded in 2014 is due to retained profit coupled with a US$500 million Tier 1 issue.
Retail Banking & Wealth Management (RBWM) division continued to perform strongly in 2014, growing at a faster rate than the market in key product groups. Revenues grew 8% to reach Dh5,621 million in 2014. Deposits grew 12% in 2014 to reach Dh113.5 billion, strengthening the banks's market leading position in the UAE.
Wholesale Banking (WB) also delivered a strong performance for 2014 with operating income at Dh4.82 billion, up by 8% compared with 2013. Net interest income of Dh3.51 billion was 10% higher for 2014 due to asset growth and yield management.
Emirates Islamic (EI) continued to deliver a healthy performance as total income (net of customers' share of profit) grew by 28% to Dh1.95 billion in 2014. Financing and investing receivables grew by 20% to Dh26.1 billion during the year. The bank continued its expansion of its branch network by opening 6 new branches in 2014.
EI's net profit grew by 161% to Dh364 million for 2014.
Emirates NBD Egypt, for its first full calendar year as an Emirates NBD entity, delivered a robust performance with total revenues grew 16% in 2014 to Dh706 million, while costs remained under control.
With more than 1,500 employees, the bank reached a net profit of Dh232 million. Deposits increased by 16%, while gross loans expanded by 5% during 2014, reaching Dh10.2 billion and Dh3.8 billion, respectively. The integration of Emirates NBD Egypt is well on track, with the Cairo head office and 61 branches across the country having been fully re-branded.