National Bank of Abu Dhabi (NBAD) reported net profits of AED 1.446 billion in 2Q'15, up 1% year-over-year and 2% sequentially. Net profits for 1H'15 were AED 2.869 billion, up 1% versus 1H'14. This represents higher diluted EPS of AED 0.53 for 1H'15 versus AED 0.52 for 1H'14.

Underlying franchise growth in strategically targeted areas of our businesses drove revenue growth in the first half of the year. During the 2nd quarter, expenses were relatively flat and credit quality remained very strong. Balance sheet growth was strong year-over-year, driven by a strong uptick in lending. In the second quarter, continued lending growth combined with a decline in customer deposits resulted in a higher loan-to-deposit ratio.

The Bank's return on equity (RoE) of 14.4% in 1H 2015 continues to remain attractive, and is in line with the medium-term target of 15%.

H.E. Nasser Alsowaidi, Chairman of NBAD said, "In the first half of 2015, NBAD delivered consistent profits in an increasingly difficult environment, whilst maintaining a strong balance sheet and robust capital position.

We have made great strides in growing our market share in Abu Dhabi through initiatives such as continuously improving customer service and refurbishing our branch network. In the 2nd quarter, we reopened our main Abu Dhabi headquarters branch, launched a new mobile banking application, and unveiled an exciting sponsorship with Dubai Mall and a partnership with Al Futtaim Group.

NBAD also continued to expand its presence on the global stage, hosting the 3rd installment of our GFM Series in Cairo, which was a successful event in one of the bank's key markets outside of the UAE.

After a strong first half, we are now well positioned for the second half of 2015."

Mr. Alex Thursby, Group Chief Executive said, "I am pleased with our second quarter results. We continue to execute against our strategy, and our franchise is growing well in strategically targeted areas. We generated strong results in Global Wholesale flow products, our Retail & Commercial business, as well as International, which has become an integral part of the development of our Wholesale and Wealth network businesses. We delivered this growth despite economic and market headwinds, including lower oil prices, margin compression and lower non-customer income in our Global Markets business.

The investment we have made in our business is delivering real benefits, and our expense growth is now moderating as expected, with costs broadly flat over the last two quarters. In the first half of the year, we continued to manage the bank prudently, using our balance sheet to support clients in a tighter liquidity environment. During the quarter, we raised $750 million in additional Tier-1 capital at attractive prices, which demonstrated investor confidence in our business model and our commitment to maintaining strong capital ratios. Our return on equity (RoE) remains attractive at 14.4% for 1H 2015.

As we look forward to the second half of 2015 and beyond, we are intently focused on several key areas, including retaining a strong focus on core clients, maintaining our prudent risk management, generating growth across our strategic businesses and continuing to build and invest in the spine of the business.

We are successfully executing against our strategy and are now well on the way toward becoming the World's Best Arab Bank. Our leading global rankings in debt capital market league tables and world class credit ratings are indicative of the significant progress we are making. As we enter the second half of 2015, I am confident that we will continue to generate quality growth and strong returns for our shareholders."

ECONOMIC OVERVIEW

During the first half of 2015, global economic performance was modest. In the US, growth has now begun to pick up and is expected to accelerate for the remainder of the year, growth in the Eurozone has recovered slightly, China has continued to experience a slowdown to a more sustainable growth rate and oil-exporting nations are now adjusting to the likelihood of a new era of lower oil prices.

The GCC countries appear to be better prepared than many other oil-exporting nations, given their combination of relatively high levels of net foreign assets and low debt-to-GDP ratios. Government spending in these countries is expected to remain healthy, albeit at lower levels, and the region continues to benefit from the stability of having its currencies pegged to the US dollar.

In the UAE, economic growth is proving to be robust, and the country is well prepared for the possibility of a continuation of lower oil prices. This has been helped by the focus in recent years on diversifying the economy away from a reliance on hydrocarbons. In fact, non-oil and gas activities now constitute more than 70% of real GDP in the UAE, and solid economic growth is expected for the balance of this year, as well as for 2016 and beyond.

Looking ahead, global economic momentum is expected to stabilise, and then to gradually improve. This will be driven by several factors, including renewed strength in the US economy, Europe's ongoing gradual recovery, the achievement of a more sustainable rate of growth in China, and India's positive trajectory as reforms take effect.

NBAD FINANCIAL HIGHLIGHTS - 2Q / 1H 2015

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