Union National Bank (UNB) reported a record profit of AED 1,748 million for the financial year 2013 (2012: AED 1,602 million), an increase of 9 per cent compared to the preceding year. The profit for the fourth quarter of 2013 increased sharply by 125 per cent to AED 306 million (Q4-2012: AED 136 million), reflecting the Group's strong financial performance in 2013. The basic and diluted earnings per share for 2013 improved to AED 0.62 (2012: AED 0.56). Commenting on the results, Mr. Mohammad Nasr Abdeen , Chief Executive Officer, Union National Bank said, " The UNB Group's focussed approach in growing its business and franchise both locally in the UAE and in the selected markets regionally has led to the Group building on its momentum over the previous years to post a strong and consistent set of results for the year ended 31 December 2013." He further added, "In this period of improving economic outlook, the UNB Group is firmly positioned to partner with the customers by offering a wide range of customised financial products and services well supported by an ever expanding branch network and technologically superior infrastructure, with the enduring emphasis being on achieving the highest level of customer centricity and satisfaction." The operating income for 2013 was AED 3,212 million (2012: AED 3,091 million), up by 4 per cent which was principally driven by a growth in net interest income and non-interest income rising by 10 per cent in 2013. The net interest income and net income from Islamic financing registered an increase of 3 per cent in 2013 to reach AED 2,603 million (2012: AED 2,539 million). The Group continued to actively manage its liquidity position, funding profile and associated costs so as to benefit from the prevailing low benchmark interest rates. In 2013, the net interest margin reduced by 12 basis points to 3.08 per cent (2012: 3.20 per cent), the impact of which was fully offset by an increase in interest earning assets. The increase in non-interest income for 2013 was mainly due to an increase in net fees and commission income which was up strongly by 15 per cent in 2013 to AED 502 million (2012: AED 437 million) partially offset by the lower gains on trading and non-trading financial instruments which decreased by 43 per cent in 2013 to AED 51 million (2012: AED 89 million). The fair value loss on investment properties reduced in 2013 at the back of improved real estate prices. The net loans and advances increased by 5 per cent in 2013 to reach AED 60.0 billion as at 31 December 2013 ( 31 December 2012 : AED 57.3 billion). The loan growth was witnessed across multiple sectors, including consumer, energy, manufacturing and trade sector. The customers' deposits recorded a growth of 3 per cent reaching AED 65.1 billion as at 31 December 2013 ( 31 December 2012 : AED 63.4 billion). The credit to deposit ratio was 92.2 per cent as at 31 December 2013 ( 31 December 2012 : 90.4 per cent) with the Central Bank of the UAE mandated advances to stable resources ratio being at circa 82 per cent as at 31 December 2013 ( 31 December 2012 : circa 78 per cent), reflecting the robust liquidity levels being maintained by the Group. The liquid assets, comprising of cash and balances with central banks and short term placements with banks, were 17.9 per cent of the total assets as at 31 December 2013 ( 31 December 2012 : 23.0 per cent), again signifying comfortable liquidity. This ratio increases significantly to 26.9 per cent as at 31 December 2013 ( 31 December 2012 : 29.9 per cent) after including the Group's trading and non-trading investments. The total assets were AED 87.5 billion as at 31 December 2013 , slightly up compared to previous year. During the year, the Group expanded its branch network by adding fourteen new branches, thereby enhancing its footprint to over 100 branches and office spread across the five countries - the UAE , China , Egypt, Kuwait and Qatar - where it operates. The Group has also been making significant investments in the areas of technology and infrastructure, and now has a common core banking platform supporting all the main Group entities. The operating expenses in 2013 increased by 9 per cent to AED 854 million (2012: AED 787 million) with one of the best efficiency ratio of 26.6 per cent (2012: 25.5 per cent) in the UAE banking sector. Concerted efforts coupled with an improving economic environment, has led to the asset quality metrics improving in a sustained manner. The ratio of non-performing loans and advances to gross loans and advances improved by 40 basis points to 4.3 per cent as at 31 December 2013 ( 31 December 2012 : 4.7 per cent). The loan loss coverage further strengthened to 90.7 per cent as at 31 December 2013 ( 31 December 2012 : 78.6 per cent). The general provision was AED 1.1 billion as at 31 December 2013 ( 31 December 2012 : AED 1.0 billion) and represented 1.41 per cent of the credit risk weighted assets as at 31 December 2013 , against a Central Bank of the UAE requirement of 1.5 per cent to be met by 31 December 2014 . The annualized return on average equity, excluding the Tier 1 capital notes, for 2013 was 13.9 per cent (2012: 14.0 per cent) with annualized return on average assets for 2013 being 2.0 per cent (2012: 1.9 per cent). Despite early repayment of the Tier 2 subordinated loan of AED 3.2 billion to the UAE Ministry of Finance in the first half of 2013, the overall Basel II capital adequacy ratio computed in accordance with the Central Bank of the UAE guidelines remained strong at 19.9 per cent as at 31 December 2013 ( 31 December 2012 : 23.2 per cent) with the Tier 1 capital adequacy ratio being 18.7 per cent (31 December 2012:18.5 per cent). The Board of Directors has recommended a dividend distribution of 15 per cent cash and 5 per cent bonus shares subject to the approval by the regulators and the shareholders.
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