Like many banks in the Gulf region, NBF has been hit hard by the global economic crisis.

In 2008, after four consecutive years of profit growing by more than 35 per cent, the bank posted a loss of AED50m. This was mainly due to writing down the value of its investment portfolio by AED250m and making AED45m worth of provisions for bad loans.

While most banks based in the UAE’s northern emirates suffered a drop in income during this period, NBF’s profits fell faster than any of its peers and it has yet to regain the ground lost to its local rivals. NBF accounted for 14 per cent of all profits made by the eight banks from the northern emirates in 2007 and 18 per cent of all assets held by them, but the equivalent figures for 2009 were 4.2 per cent of profits and 12.5 per cent of assets.

Its task is made all the harder because of the competitive nature of its home market. Fujairah is a small economy, yet 11 UAE-based banks and three international banks all compete for business in the emirate. Between them these banks operate a total of 27 branches in Fujairah, making it the most heavily banked of the emirates relative to the size of its population.

In the past year, there have been signs of its fortunes changing for the better. In 2009, it returned to profit, despite making further loan loss provisions of AED214.3m.

Over the past two years, the bank has also managed to turn around a worrying slide in its capital adequacy ratio, which had fallen from 27.7 per cent in 2005 to 14.69 per cent in 2007. In 2008, this figure rose to 17.8 per cent and by 2009, it had improved to 22.4 per cent.

Profits have continued to head in the right direction this year, with results for the first half of 2010 showing a 36.7 per cent rise in profits compared to the same period of 2009, to AED83m.

However, loan loss provisions are also up, from AED60.7m in the first half of 2009 to AED97.1m in the equivalent period this year, indicating that the downturn is still having an impact on the bank.

While it has been doing some things right in recent years, the bank’s management team will still have to work hard to regain the reputation it had before the crash for delivering consistently good profit growth.