Abu Dhabi-based Finance House group has posted a total comprehensive income of AED 65 million for 2016, 50 per cent higher than its 2015 results.
On the back of a steady growth in the asset book and robust recoveries from non-performing loans, Finance House group (profile) reported net interest income, income from Islamic financing and investing assets, and net income from perpetual instruments grew by 23.6 per cent to reach AED 245.4 million in 2016 compared to AED 198.4 million in the previous year.
The listed financial services company posted a total comprehensive income of AED 43.35 million in 2015.
Net fee and commission income was up by 7.7 per cent year on year, fueled in part by higher brokerage fees from a late surge in Q4 trading volumes in domestic equity markets. Net insurance Income grew to AED 7.7 million in 2016 compared to AED 0.7 million in the previous year, aided by a sustained turnaround in the core operations of the insurance subsidiary.
Aggregate investment and other operating income from Finance House group’s proprietary investment portfolio consisting of listed equity, private equity, fixed income and real estate assets grew by 13.7 per cent to AED 85.3 million in 2016 compared to AED 75 million in 2015.
Commenting on FY 2016 results, Mohammed Abdulla Alqubaisi (biography), Chairman of Finance House group said: “Despite challenging local, regional and global market conditions, we are proud to maintain our profitable stance for the 12th successive year since inception. This is a tribute to the resilience of our sound business model and the robustness of our liquidity management and strategy execution capabilities.”
Finance House results breakdown
Net loans and advances as of 31 December 2016 including Islamic financing and investing assets were flat at AED 2.23 billion, compared to AED 2.30 billion at the end of the previous year. The resultant loans to deposit ratio as of 31 December 2016 was 78.6 per cent, reflecting both a cautious approach to asset/liability growth and head room available for continued loan book growth in the immediate future.
Finance House group’s loan loss provisioning policy continues to be conservative. Considering the challenging credit environment in the UAE, net impairment charge on loans and advances for the year 2016 has been stepped up to AED 121.77 million compared to AED 85.91 million in the previous year.
Total operating expenses at the consolidated level were higher by 7.7 per cent in 2016 compared to 2015 mainly due to hiring new employees and higher establishment costs, in line with increased business volumes across major business segments. Despite the absolute increase in total operating expenses, the cost/income ratio for 2016 was lower at 56.8 per cent compared to 57.6 per cent in 2015, signifying improved overall operating efficiency.
Since the onset of the financial crisis in October 2008, Finance House group has remained a net lender to the UAE inter-bank market. Net cash and cash equivalents as at 31 December 2016 stood at AED 737.60 million, representing a robust 16.7 per cent of Total Assets.
At the consolidated level, shareholders’ equity as of 31 December 2016 stood at AED 953.75 million compared to AED 954.19 million at the end of 2015. This is after distributing a cash dividend of 10 per cent for 2015, amounting to AED 30.95 million and 7.5 per cent coupon on the Tier 1 sukuk amounting to AED 22.50 million.
Capital adequacy ratio at the consolidated level as of 31 December 2016 stood at a robust 24.6 per cent compared to 23.3 per cent at the end of the previous year.
In January 2017, the investment grade corporate credit ratings of Finance House were reaffirmed by Capital Intelligence, at “A3” Short Term and “BBB-” Long Term, both with a stable outlook.
“We look forward to 2017 with cautious optimism for sustained profitable growth, in line with our growth aspirations. Our strategy is sound and we have the necessary mechanisms and structures in place to exploit profitable opportunities, to adapt quickly to changing market conditions, to continue managing risks well and to maximize returns for our shareholders,” concluded Mr. Alqubaisi.