United Arab Bank posts 65% growth in 2023 net profits

The bank said growth in net profit is a result of improved operating performance and lower expected credit losses, coupled with disciplined cost management.— Supplied photos

United Arab Bank (UAB) on Thursday posted a net profit of Dh255 million for the financial year 2023 compared to a net profit of Dh155 million in 2022, representing an increase of 65 per cent.

In a statement, the bank said growth in net profit is a result of improved operating performance and lower expected credit losses, coupled with disciplined cost management.

UAB’s financial performance was aided by significant progress across the core businesses with total operating income recording a 15 per cent growth in financial year 2023 as compared to 2022 and are expected to improve further with new portfolio underwritings in quality assets.

Total assets grew 25 per cent year-on-year basis last year to Dh17.6 billion, driven by the strong growth in loans, advances and Islamic financing (+23 per cent year-on-year basis), as well as in the investments portfolio (+31 per cent year-on-year basis).

Augmented by the Additional Tier 1 capital issuance of $150 million during the first quarter of 2023, the bank continues to maintain a solid capital adequacy ratio of 19 per cent and a CET1 ratio of 13.5 per cent, both of which remain well above the regulatory requirements, and supporting credit growth ahead. NPL ratio notably improved from 8.2 per cent in fiscal year 2022 to five per cent in 2023.

The bank continues to focus on growing its core businesses and revenues across its wholesale banking, retail banking and treasury and capital markets segments, whilst moving towards a more agile operating model offering digital solutions and capabilities, thereby positioning itself as the partner of choice among major clientele.

The bank’s robust liquidity profile is also demonstrated by an advances to stable resources ratio of 76 per cent and an eligible liquid asset ratio of 20 per cent, both comfortably above regulatory thresholds.

Commenting on the bank’s financial results, Sheikh Faisal bin Sultan bin Salem Al Qassimi, Chairman of the Board of Directors, UAB, said:

“I am delighted to announce that we have recorded another year of remarkable growth in net profits, driven by relentless and disciplined execution of the new strategy. We remain focused on capitalising on the sound foundation that has now been built, with future growth pursued in a responsible and a sustainable manner. We also remain committed to supporting the growth ambitions of the country, whilst delivering superior returns to our shareholders. On behalf of the Board and the management, I would like to convey my gratitude to the visionary leaders of UAE, our valued customers, regulators, partners and shareholders, for their continued support and trust in UAB.”

Shirish Bhide, CEO of UAB, emphasised the bank’s commitment to excellence, further affirmed by the significant growth in revenues and profits achieved in 2023:

“Our customer-centric approach and prudent policies led to a 15 per cent increase in revenues and a 65 per cent surge in profits. The bank also delivered double-digit growth in assets, stemming from strong business demand and momentum. We expect this strong momentum to continue in 2024.”

The CEO also highlighted the bank’s ongoing focus on maintaining asset quality.

“UAB has significantly improved its asset quality, having more than halved the NPL ratio to five per cent in 2023 from 11.6 per cent just two years ago,” he said.

“The balance sheet was further strengthened by raising $150 million of Additional Tier 1 capital and a two-year Dh735 million medium-term borrowing at market competitive rates. In addition to onboarding new clients and launching new products across business segments, including green sustainable finance products during COP28, UAB also saw an increase in CASA deposits and improved client connectivity. The bank’s commitment to elevate customer satisfaction was demonstrated by the establishment of a new Customer Contact Centre to provide 24×7 availability,” he added.

“Looking to the future, we are confident we can deliver on our strategy by building on the significant progress we have attained over the past year with the constant support of our loyal customers and employees. Our relentless focus remains on delivering relevant products and services to our customers, and using technology and service to constantly enhance their banking experience,” Bhide concluded.