This represents an 8.1% increase over the 2011 result. The last quarter of 2012 contributed $78.6 million to the overall increased result, as compared to $ 70.3 million in Q4/2011.
Total operating income grew by 6.0% to $892.8 million over 2011, driven by a 12.3% increase in net interest income, a 3.5% improvement in fee based income and an 8.5% increase in share of profit from associates and joint venture. Deployment of liquidity into diversified and risk acceptable sectors and assets resulted in the overall improvement in the net interest margin from 2.1% in 2011 to 2.2% in 2012. Key drivers of the increase in operating income were the 3.1% growth in net loans and advances together with a 17.2% growth in the non-trading investments portfolio over December 2011, funded by a 5.1% increase in customers’ deposits. Interest income includes a minor $0.8 million exceptional gain from early repayment of subordinated debt. Ongoing adoption of a disciplined cost culture within the AUB Group further improved the cost income ratio to 29.9% (2011: 32.4%) and positively contributed to profitability.
Credit quality levels were maintained with a non-performing loans level of 2.4% comparable to 2.5% in 2011. The overall provision coverage ratio (including collective impairment provisions) was increased to 150% at 31 December 2012 as compared to 135% as of 31 December 2011, as part of AUB’s ongoing prudent risk management strategy. Specific provision coverage improved from 86.0% in 2011 to 87.7% in 2012.
Return on Average Equity for the year stood at 13.0%, an increase over the 12.7% achieved in 2011. The Group’s Return on Average Assets increased from 1.2% to 1.3% in 2012.
The resultant basic earnings per share was US cents 6.4 for the year ended 31 December 2012 (2011: US cents 5.9). Given the excellent 2012 result for AUB, the Board of Directors has recommended a cash dividend of US cents 4.0 per share (2011: US cents 3.0) together with a bonus ordinary share issue of 5% (2011: 5%) to augment share capital.
“AUB continued its annual improvement in financial results into 2012, in the face of continuing uncertain and challenging business and operating environment. Despite expected similar challenges in 2013, AUB continues to remain confident of its resilience and ability to maintain its performance given its strong fundamentals and prudent, proactive management of risks. It will continue to seek, identify and tap organic as well as inorganic growth opportunities within an acceptable risk-return framework,” Fahad Al-Rajaan, Chairman, AUB, said.