National Bank of Fujairah (NBF) recorded a profit of AED104.3m ($28.39m) in 2009 compared to a loss of AED50.3m in the previous year.
The bank attributed the return to profitability to the prudent policies it undertook last year and the strength of its core customer base.
“The Bank has grown its core earnings which, coupled with the recovery of the investment portfolio, helped in absorbing credit losses and maintaining profitable operations,” said Easa Saleh Al Gurg, deputy chairman of NBF.
“The build-up in provisioning levels has enabled the bank to face uncertain credit conditions in the Gulf with confidence.”
Net provisions amounted to AED214.3m, a 19 per cent increase compared to AED179.7m in 2008. This included AED73m in respect of the bank’s AED92m exposure to the multi-billion dollar debt defaults in May last year by Saudi family-owned firms Ahmad Hamad Al-Gosaibi & Bros. and the Saad Group.
In addition to the rising provisions against loan losses, the bank has also been hit by the slowdown in lending and the higher cost of funds which continue to be at unprecedented levels.
Operating income reduced to AED506.5m compared to AED537.9m in the same period last year, while total assets stood at AED11.9bn, a seven per cent decline from AED12.8bn at the end of 2008.