UNB posts second straight profit rise

Abu Dhabi's Union National Bank (UNB) beat analysts' forecasts with its second straight rise in profit in the third quarter as its expands its lending business and taps a recovery in UAE stock markets.

Net income in the three months to September 30 surged 43.1% to 295.2 million dirhams ($80.39 million), or 0.19 dirhams per share, compared with 206.3 million dirhams, or 0.13 dirhams per share, the bank said in a statement.

Analysts' third-quarter profit forecasts in a Reuters survey last month ranged from 244 million dirhams to 267 million dirhams.

"Core banking income continues to remain strong," said Mihir Marfatia, an analyst at Kuwait-based Global Investment House, which forecast profit at 245 million dirhams.

Net interest income jumped almost 36% to 290.4 million dirhams, and fees and commissions 47% to 97.97 million dirhams, said UNB, which operates 47 branches in the UAE.

"Going forward, on the back of conducive macroeconomic environment, net interest income is likely to remain strong and drive growth in earnings," Marfatia said.

Net loans and advances jumped 36.4% to 35 billion dirhams in the year to September 30, said the bank, which is 50% owned by the government of Abu Dhabi and 10% by Dubai.

The results reflect "our strategy to pursue focussed growth in our home market, whilst following a controlled regional expansion", Chief Executive Mohammad Nasr Abdeen is quoted as saying in the statement. Abdeen could not immediately be reached for comment.

"The bank's lending was across the board, corporate as well as retail but not much of mortgage lending," Satya Dayanand, head of strategic planning and financial control, told Reuters. He declined to give further details.

HSBC Holdings this month started coverage of UNB recommending investors buy its stock and giving it a target price of 12.7 dirhams.

UNB shares have risen 28.4% this year to Wednesday's close, underperforming the index. The shares closed up 2.93% on Thursday at 9.21 dirhams.

UNB also controls Alexandria Commercial and Maritime Bank, which operates nine branches in Egypt, and UAE-based Union Brokerage Company, which services the Abu Dhabi and Dubai stock markets.

Abu Dhabi's main index has surged 42% this year, the best performer in the Gulf, and Dubai 20%.

HSBC expects UNB's retail loan portfolio to expand 45% this year as the UAE economy expands, as record oil prices spur higher government spending and private investment.

By comparison, Abu Dhabi National Bank and First Gulf Bank have outperformed the benchmark. - Reuters

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