Finance House (FH) reported consolidated net profit of AED 83.7 million for 2013, 15.9 per cent higher than the net profit of AED 72.2 million achieved in the previous year. Total Comprehensive Income for the year grew by 52.3 per cent to reach AED 117.6 million compared to AED 77.2 million in the previous year. Total Assets grew to AED 4.12 billion as at 31 December 2013, up 10.6 per cent compared to AED 3.72 billion as at 31 December 2012.
The Board has recommended a cash dividend of 25 per cent subject to regulatory approvals. Mohammed Alqubaisi, Chairman of Finance House said, “We are proud to maintain our profitable stance for the ninth successive year since inception. In less than a decade, we have experienced a complete boom-bust cycle and it is gratifying to note that our resilient business model has delivered profitable growth not only during periods of rapid economic growth but also during periods of relative economic stagnation or contraction. For a genuine private sector enterprise operating in the fiercely competitive UAE financial services sector, this is a creditable achievement indeed.”
During the year, Customer Deposits grew by 20.8 per cent to reach AED 2.18 billion compared to AED 1.80 billion as at the end of the previous year.
Due to margin compression in a low interest rate environment, Net Interest Income and Income from Islamic Financing & Investing Assets was flat at AED 128.4 million in 2013 compared to AED 128.7 million in 2012. However, Net Fee and Commission income jumped by 50.3 per cent to AED 43.5 million in 2013, compared to AED 28.9 million in 2012. Aggregate investment income from the proprietary investment portfolio was up by 11.2 per cent to AED 94.7 million in 2013 compared to AED 85.1 million in the previous year.
As a combined result of the above, Total Operating Income for 2013 was up by 9.4 per cent at AED 266.4 million compared to AED 243.4 million in the previous year.
Net Loans & Advances including Islamic Financing & Investing Assets as at 31 December 2013 grew by 8.4 per cent to AED 1.58 billion compared to AED 1.46 billion at the end of the previous year. Loans to Deposits ratio as of 31 December 2013 stood at 72.5 per cent compared to 80.8 per cent in the previous year, reflecting a cautious approach to loan book growth as well as the significant head room available for sustained loan book growth in 2014 and beyond.
FH’s Non Performing Loan provisioning policy continues to be conservative and as of 31 December 2013, the company maintained loan loss coverage of 94 per cent (2012: 81 per cent) by way of specific provisions to cover net exposure against individually impaired loans as well as loan balances that are past due for 91 days or more but are not impaired. In addition, FH also maintains a collective provision of 1.25 per cent of the Performing Portfolio.
Total operating expenses were higher by 6.7 per cent in 2013 compared to 2012 mainly on account of hiring new employees and higher establishment costs, in line with increased business volumes across all business segments. Despite higher operating expenses, the Cost/Income ratio improved by 1.4 per cent in 2013 compared to 2012.
Since the onset of the financial crisis in October 2008, FH has remained a net lender to the UAE inter-bank market and continues to maintain this position till date. Cash and cash equivalents as at 31 December 2013 rose to AED 817 million compared to AED 599 million as at the end of the previous year, representing 19.8 per cent of Total Assets.
Shareholders’ Equity as at 31 December 2013 improved to AED 729 million registering a year on year increase of nearly 12 per cent. Capital adequacy ratio computed in accordance with Basel II guidelines stood at 24.6 per cent.
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