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Corporate Update

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Sharjah Islamic Bank profit surges 7% to Dh510 million Sharjah Islamic Bank (SIB) posted a net profit of Dh510.4 million in 2018 compared to Dh477.7 million in 2017, showing an increase of seven per cent. The Shariah-compliant lender proposed eight per cent cash dividend for the shareholders. Total operating income reached Dh1.7 billion in 2018 compared to Dh1.5 billion in 2017, an increase of Dh225.8 million or 15.2 per cent. Total fees and other income from investments and subsidiaries increased by Dh21 million or 4 per cent to reach Dh541.3 million in 2018, whereas net operating income reached Dh1.1 billion in 2018 compared to Dh0.9 billion last year, recording an increase of Dh154 million or 16.5 per cent. The balance sheet reflects the bank's strong performance and sound financial position, with total assets reaching Dh44.7 billion at the end of December 2018, growing by 17 per cent compared to Dh38.3 billion at the end of 2017. The lender noted that liquid assets reached Dh9.7 billion or 21.6 per cent of total assets at the end of December 2018. Financing facilities reached Dh24.1 billion compared to Dh21.7 billion in 2017, showing an increase of Dh2.4 billion or 11 per cent. SIB successfully attracted more deposits during the year as customer deposits increased by 18.5 per cent, amounting to Dh4.1 billion to reach Dh26.4 billion compared to Dh22.3 billion in the previous year. During 2018, Sharjah Islamic Bank issued a $500 million five-year sukuk as part of its $3 billion medium-term notes sukuk programme. Sharjah Islamic bank's strong performance reflected positively on its financial indicators. The Basel III capital adequacy ratio stood at 17.690 per cent by the end of 2018, far above the UAE Central Bank's minimum requirement of 12.375 per cent. Sharjah Islamic Bank has a large local branch network of 34, supported by 149 ATMs distributed across all emirates. Source:https://www.khaleejtimes.com/business/corporate/sharjah-islamic-bank-profit-surges-7-to-dh510-million RakBank profit rises 13% on net interest income The National Bank of Ras Al-Khaimah (RakBank) on Wednesday said its 2018 net profit grew 13.2 per cent from Dh810.5 million in 2017 to Dh917.5 million in 2018, thanks to a surge in net interest income and income from Islamic financing and a decline in provisions. "This considerable increase in profit was due mainly to an increase in net interest income and net income from Islamic financing - which grew by Dh45.5 million - and a decrease of Dh131.8 million in provisions for impairment in loans," said Peter England, CEO, RakBank. "There are tangible results to show that the efforts we have made to de-risk certain parts of the business over the last few years have allowed us to reduce provisions and improve the quality of our loan book," England said. Total assets grew by 8.5 per cent to Dh52.7 billion, due to an increase of Dh1.6 billion in gross loans and advances, lending to banks - which grew by Dh956 million - and an increase in investments of Dh1.6 billion. Wholesale bank lending grew by 22.2 per cent, up Dh1.4 billion from the previous year. The personal banking loan portfolio was down by Dh346 million and business banking loan portfolio was up by Dh494 million compared to 2017. Customer deposits grew by 6.1 per cent to Dh34.1 billion, with growth derived mainly from an increase of Dh2.7 billion in time deposits. "While 2018 presented hurdles, we maintained our diversification path, which is a core part of our 2020 Strategic Plan. RakBank is placing a greater emphasis on connecting new technologies with advanced processes that will deliver state-of-the-art services," said Mohamed Omran Alshamsi, chairman, RakBank. Listed on the Abu Dhabi Securities Exchange, RakBank shares closed at Dh4.15 on Wednesday. Total operating income increased by Dh17.1 million to Dh3.8 billion, mainly due to an increase of Dh45.5 million in net interest income and income from Islamic financing, net of distribution to depositors. Non-interest income declined by Dh28.3 million to Dh1.1 billion. This was due to a year-on-year decrease of Dh61.2 million in investment income. However, the decrease was offset by an increase of Dh12.7 million for fee and commission income and an increase of Dh24.0 million for foreign exchange and derivative income. Source:https://www.khaleejtimes.com/business/corporate/rakbank-profit-rises-13-on-net-interest-income ADCB, UNB, Al Hilal merge to form Dh420 billion bank The third largest banking group in the UAE with total assets of Dh420 billion will be formally launched soon following a decision announced on Tuesday by Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB) to merge, and to acquire Al Hilal Bank. The new banking group, the fifth largest in the GCC, will carry the ADCB identity. The combined entity will be the second largest retail lender in the UAE by assets, with 21 per cent share of retail loans as well as a strong Islamic banking platform as the third largest Islamic banking franchise in the UAE. The transaction of the three-way merger, the fourth major banking industry consolidation in the UAE in recent times, has been recommended unanimously to shareholders by the boards of ADCB and UNB, and is subject to regulatory and shareholder approvals to be sought in the coming weeks, a joint statement issued by the three lenders said. In the UAE, merger talks have been underway among local banks following the successful merger of the National Bank of Abu Dhabi and First Gulf Bank in 2017 to create the Dh671 billion First Abu Dhabi Bank. Emirates NBD, which came into being after the merger of National Bank of Dubai and Emirates Bank International in 2007, has assets of Dh477 billion while the merger of Dubai Bank and Emirates Islamic Bank led to the formation of Emirates Islamic Bank in 2012.  ADCB chairman Eissa Mohamed Al Suwaidi becomes Chairman designate of the new banking group and Mohamed bin Dhaen Al Hamli vice-chairman designate. ADCB CEO Alaa Eraiqat becomes the group CEO designate. Al Hilal Bank will be taken over via a mandatory convertible note for up to 117.6 million post-merger ADCB shares to Abu Dhabi Investment Council after the completion of the statutory merger. The new banking group will continue to benefit from strong institutional backing, through the Government of Abu Dhabi's majority ownership. Al Hilal Bank will retain its existing name and brand and operate as a separate Islamic banking entity within the group. ADCB will reinforce its position as the third largest financial institution in the UAE and will become the fifth largest in the GCC with around one million customers, accounting for a significant share of the UAE market as follows - 15 per cent of total assets; 21 per cent of retail loans, and 16 per cent of deposits. "Greater scale will permit larger scope for financing to support the UAE's economic agenda for diversification and growth, and more investment in the bank's people, technology and infrastructure," said the statement. The proposed transaction between ADCB and UNB will be executed through a statutory merger. ADCB will issue 0.5966 ADCB shares for every UNB share, corresponding to a total of 1,641,546,697 new shares issued to UNB shareholders. The exchange ratio implies a premium to UNB shareholders of 0.6 per cent versus the closing price of the previous trading day (January 28, 2019) and 13.7 per cent versus the pre-leak share price3. On the effective date of the merger, UNB shares will be delisted from the Abu Dhabi Securities Exchange. The combined bank will retain ADCB's legal registrations. Al Hilal Bank will be acquired by the combined ADCB/UNB entity, for a consideration of approximately Dh1 billion. The three banks will continue to operate independently until the combination becomes effective, which is expected within the first half of 2019. The combination is subject to approvals by shareholders and relevant regulators, including the UAE Central Bank. The transaction requires the approval of at least 75 per cent by value of the shares represented at quorate general assembly meetings of each of ADCB and UNB. Following completion of the merger and the acquisition process, the Government of Abu Dhabi, through the Abu Dhabi Investment Council, will own 60.2 per cent of the combined bank. Other ADCB shareholders will own 28 per cent and other UNB shareholders will own 11.8 per cent of the combined bank. The new board and management of the combined bank will assume their new roles when the transaction becomes effective. "This is a very exciting transaction that will create a larger, preeminent and resilient banking group. It is a landmark deal for the UAE that will contribute significantly to our national ambitions," said Al Suwaidi. He said the enlarged ADCB would have the scale and expertise to play a central role in the next stage of the UAE's economic development. "By building on past successes to produce an even stronger, performance-driven and customer-centric institution, the combined bank will continue to set high standards for the UAE banking sector and contribute to Abu Dhabi's development into a global financial centre." Eraiqat described the transaction as a confident and transformational move that creates a new, robust and agile financial institution, built on a strong track record in conventional and Islamic banking. "The new bank is well-positioned to provide support for the UAE's economic vision, and actively participate in the country's growth and diversification. We look forward to creating a bank that will thrive in the region's fast changing economic environment, while creating sustainable value for customers, employees, investors and communities," said Eraiqat. The consolidation is expected to deliver cost synergies of approximately Dh615 million annually on a run rate basis, which equates to around 13 per cent of the three banks' combined cost base, above the global benchmark of between eight per cent to 10 per cent for similar domestic transactions. "These benefits are expected to be realised over two to three years. The transaction has high potential for creation of shareholder value. It is expected to produce an uplift in earnings per share for the shareholders of the three banks in a steady state, with the combined bank expected to deliver double-digit returns on equity," said the statement. Source:https://www.khaleejtimes.com/business/corporate/adcb-unb-al-hilal-merge-to-form-dh420-billion-bank--

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