ADIB's falling profit rounds up mixed results season for Abu Dhabi banks

Prospects for the UAE as a whole for 2017 are encouraging, and supported by a recovery in oil prices, said ADIB Chief Executive Tirad Mahmoud

Abu Dhabi Islamic Bank saw profits fall in the fourth quarter while peer Union National Bank reported a surge in revenues on Tuesday, rounding up a mixed results season for Abu Dhabi lenders.

The emirate's five domestic banks are battling tight liquidity and rising bad loans due to the economic impact of lower oil prices.

Loan and deposit growth remain in single digits and banks continue to book provisions for bad or doubtful loans.

ADIB, the emirate's largest sharia-compliant bank made a net profit of 455.1 million dirhams ($124 million) in the three months ending Dec. 31, down 4.7 percent. Revenues fell 2 percent while provisions rose by 1.2 percent over the same quarter of 2015, the bank said in a statement.

Prospects for the UAE as a whole for 2017 are encouraging, and supported by a recovery in oil prices, said ADIB Chief Executive Tirad Mahmoud.

"Nonetheless, we continue to forecast modest customer financing growth in the UAE and an increase in provisions in the UAE retail banking," he said.

Impairments fall

UNB, in contrast, said its fourth-quarter net profit jumped 29 percent to 251 million dirhams, helped by a sharp fall in provisions.

The bank, which is 50 percent owned by the Abu Dhabi government, reported operating income of 905 million dirhams, up 5 percent on a year earlier, as impairments tumbled 21 percent to 313 million dirhams.

Tight competition and pressure on margins has led to consolidation in Abu Dhabi's banking sector, with National Bank of Abu Dhabi and First Gulf Bank in the process of merging to create one of the largest banks in the Middle East and Africa.

Last month NBAD, the emirate's biggest lender by assets, reported a 28 percent rise in fourth-quarter net profit to 1.33 billion dirhams last month.

In contrast, FGB's fourth-quarter net profit fell 11 percent to 1.53 billion dirhams and Abu Dhabi Commercial Bank, the emirate's second largest bank by assets, saw its profits drop 16 percent to 1 billion dirhams as impairments for doubtful loans weighed.

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

NOTE: Comments posted on arabianbusiness.com may be printed in the magazine Arabian Business

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

All comments are subject to approval before appearing

Further reading

Features & Analysis
First bank merger in 20 years sets Saudi Arabia up for more deals

First bank merger in 20 years sets Saudi Arabia up for more deals

Q&A look at what the planned merger of HSBC and RBS’s Saudi ventures...

A natural move: How Dubai Chamber is strengthening its ties in Latin America

A natural move: How Dubai Chamber is strengthening its ties in Latin America

With vast resources and more than half-a-billion people, the...

If Saudi future's so bright, why can't these banks find buyers?

If Saudi future's so bright, why can't these banks find buyers?

No big-name global banks eager to buy stakes in Saudi banks,...

Most Discussed
sponsoredTracking