Net profit down 22% Q-o-Q, cash dividend stable Y-o-Y. NBAD reported a net profit of AED1,036 million for 4Q2015, down 22% Q-o-Q and 25% Y-o-Y. Earnings missed our expectation of AED1,258 million (Bloomberg consensus of AED1,245 million) owing to higher-than-expected provisioning and loss on investments. The bank’s board proposed a cash dividend of AED0.40/share (pay-out c40%), in-line with 2014’s AED0.40 but slightly higher than our AED0.38/share expectation.   Our view of the results: A mixed set of results. Provisioning came in higher-than-expected – cost of risk rose to 81bps from 31bps in 3Q2015 -  as the NPL ratio deteriorated to 2.76% from 2.60% in 3Q2015. Management attributed the increase in provisioning to a mix of a challenging operating environment, stress in the SME book and prudent provisioning. NBAD anticipates a gradual increase in the cost of risk in 2016 from c45bps in 2015. Operating costs surprised positively as management focused on improving efficiency. NBAD is eying neutral to positive JAWS in 2016. Spreads were relatively stable as the bank reined-in loan growth by running off trade finance loans to cope with the tightening liquidity. NBAD trades at 2015 P/BV of c1.0x. We have a Buy rating on the stock.   Main positives: i) Good cost control (OPEX up +2.1% Q-o-Q, -5.4% Y-o-Y); and ii) relatively stable spreads (-3bps Q-o-Q to 1.84%). Main negatives: i) higher provisioning (cost of risk rose to 81bps from 31 bps in 3Q2015); 2) deterioration in credit quality metrics (NPL ratio rose to 2.76% from 2.60% in 3Q2015); iii) contraction in the loan book (-2.9% Q-o-Q). (Company disclosure, Shabbir Malik)