06/02/2018 05:01 AST
Dubai-based Commercial Bank International (CBI) has posted a net profit of Dh175 million ($47.6 million) for 2017 as compared to Dh125 million in the previous year, marking an increase of 40 per cent.
This was due to a 7 per cent rise in net operating profit (from Dh383 million in 2016 to Dh411 million last year) and a 8 per cent fall in impairment charges, which dropped to Dh237 million in 2017 from Dh258 million in 2016, a bank statement said.
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 per cent for FY 2017 to Dh866 million, driven by both wholesale banking and retail banking businesses. Net interest income rose by 10 per cent in FY 2017 to Dh556 million, up from Dh507 million in 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, said: "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 per cent compared to the previous year. This, combined with lower net provisions, resulted in a 40 per cent increase in our net profit for 2017. These are strong results that position us very well for the future growth of our business."
FY 17 also witnessed a 22.7 per cent decrease in the amount of non-performing loans (NPLs), which brought CBI's NPL ratio down to 7.2 per cent.
Capital adequacy under the new Basel III regime remained stable at 14.8 per cent and the Bank has strong liquidity with Eligible Liquid Assets Ratio (ELAR) of 14.7 per cent and Loan to Deposit Ratio (LDR) of 91 per cent.
There was a slight decline in operating expenses in FY 17 compared to FY 16 - down to Dh454 million from Dh456 million.
CBI's cost income ratio also decreased to 52.5 per cent 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 saw strong performance in FY 17, driven by improvements in mobile and internet banking and a renewed emphasis on customer service, 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 per cent, while Retail Banking income rose by 3 per cent compared to the year before, from Dh298 million to Dh307 million.
CBI's customer base grew by 17 per cent, while the number of new credit card customers in 2017 increased by 56 per cent compared to 2016.
There was significant growth in wholesale banking in 2017, with income up 5 per cent to Dh500 million compared to 2016, when the corresponding figure was Dh477 million.
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