CBI net profit increases by 40% to AED 175 million

CBI net profit increases by 40% to AED 175 million in 2017 as turnaround continues

Commercial Bank International (CBI) today announced its FY 2017 financial results.

Financial highlights – 12-months ending 31 December 2017:

• Full year net profit increased by 40% to AED 175 million from AED 125 million in 2016
• Net interest income AED 556 million, up 10% year-on-year
• Impairment charges down 8% from previous year
• Non-performing loan ratio (NPL) 7.2% versus 8.7% in 2016
• Capital Adequacy Ratio (CAR) remained stable at 14.8% versus 14.4% at December 31, 2016

Mohammad Sultan Al Qadi, Chairman of CBI, said: “CBI’s turnaround story continued in 2017 with our strategy producing further improvements in financial performance. Performance improvements have been driven by significant recovery efforts as well as revenue growth, expense control, and the better allocation of resources. We witnessed strong year-on-year growth in both our Wholesale and Retail Banking units, as well as cost efficiency gains through organizational redesign and changes to our size and structure.”

Mark T. Robinson, CEO of CBI, added: “CBI’s strong balance sheet is supported by lower non-performing loans, stable capital adequacy and strong liquidity. We have managed to increase our revenues, while decreasing our expenses, which drove our net operating profit improvement of 7% compared to the previous year. This, combined with lower net provisions, resulted in a 40% increase in our net profit for 2017. These are strong results that position us very well for the future growth of our business.”

Financial Summary

CBI’s net profit rose by 40% in 2017 to AED 175 million compared to AED 125 million in the same period of 2016. This was due to a 7% rise in net operating profit (from AED 383 million in 2016 to AED 411 million last year) and a 8% fall in impairment charges, which dropped to AED 237 million in 2017 from AED 258 million in 2016. This was driven by significant recovery efforts, as well as net income growth due to better control over expenses and resource allocation. 

Operating income rose by 3% for FY 2017 to AED 866 million, driven by both our Wholesale Banking and Retail Banking businesses.

Net interest income rose by 10% in FY 2017 to AED 556 million, up from AED 507 million in 2016.

FY 17 also witnessed a 22.7% decrease in the amount of non-performing loans (NPLs), which brought CBI’s NPL ratio down to 7.2%.

Capital adequacy under the new Basel III regime remained stable at 14.8% and the Bank has strong liquidity with Eligible Liquid Assets Ratio (ELAR) of 14.7% and Loan to Deposit Ratio (LDR) of 91%.

There was a slight decline in operating expenses in FY 17 compared to FY 16 – down to AED 454 million from AED 456 million.

CBI’s cost income ratio also decreased to 52.5% for the year, down 1.9 percentage points on 2016. The cost efficiency gains were driven through organizational redesign, branch rationalization, and digital transformation.

Retail Banking summary

2017 was a year of transformation for CBI’s Retail Banking unit.

Retail Banking saw strong performance in 2017, driven by improvements in mobile and internet banking and a renewed emphasis on customer experience, including the launch of a new priority banking proposition, CBI First.

The bank’s digital transformation also included the launch of new internet and mobile banking platforms.

The upgrade to the core banking platform has significantly modernised the bank’s technology and operations, giving it a solid platform to streamline services and improve operational efficiency.

CBI witnessed an increase in retail customer deposits of 11%, while Retail Banking income rose by 3% compared to the year before, from AED 298 million to AED 307 million.

CBI’s customer base grew by 17%, while the number of new credit card customers in 2017 increased by 56% compared to 2016

In 2018, CBI will continue to focus on delivering a best in class customer experience and providing its customers with more convenient ways to bank.

Wholesale Banking summary

There was significant growth in Wholesale Banking in 2017, with income up 5% to AED 500 million compared to 2016, when the corresponding figure was AED 477 million.

CBI’s Wholesale Banking business focused on providing its customers with improved services that fulfil their needs, growing the business, and maintaining asset quality.

CBI launched a number of new products and stepped up its digital offering, including enhancing cash management, internet banking and mobile banking services.

In Islamic Banking, a new Liquidity Murabaha product was launched and the proposition was strengthened with Islamic Wakala, Islamic Term Deposits and Islamic Debit Cards.

On the transaction banking front, new products were introduced as well and CBI expanded its structured commodity trade book, escrow services and clean negotiation offerings.

As a result of these developments, Wholesale Banking customers are now benefitting from a wider product offering with better digital banking channels.