Union National Bank's Q1 net profit rises 4.2%

Abu Dhabi-Dubai partnership earned a net profit of $134.8 million

Union National Bank, jointly owned by the governments of Abu Dhabi and Dubai, posted a 4.2 percent increase in first-quarter net profit on Wednesday, in line with analysts' forecasts, as operating income rose at the bank.

The Abu Dhabi-headquartered lender earned a net profit of 495 million dirhams ($134.8 million) in the first three months of 2013, compared with 475 million dirhams in the same period a year earlier, it said in a bourse statement.

Analysts polled by Reuters forecast an average profit of 495.8 million dirhams in the first quarter.

Earlier on Wednesday, UNB said it had fully repaid the outstanding 1.7 billion dirhams of support from the United Arab Emirates' ministry of finance which was placed with the bank in 2008 as part of a system-wide measure to protect the banking system from the global financial crisis.

It paid the first 1.5 billion dirhams portion in March.

The bank's earnings benefited from a 4.7 percent increase in operating income versus the first quarter of last year.

This, in turn, was due to a year-on-year rise in net interest and Islamic financing income, up 3.9 percent to 642 million dirhams, and non-interest income, 7.7 percent higher at 176 million dirhams.

Deposits at the bank rose 6.9 percent in the quarter to total 67.8 billion dirhams at March 31, up from the 63.4 billion dirhams at March 31 2012 and December 31 last year.

Loans and advances rose marginally year-on-year, by 0.2 percent, to 58.2 billion dirhams as at March 31.

HSBC upgraded UNB to 'overweight' from 'neutral' in a March 5 note, citing overdone pessimism towards the bank's loan loss provisioning, which could be blamed on UNB's lack of disclosure on key problematic exposures.

UNB shares rose 3.8 percent on Wednesday prior to the announcement of results, although only 2,500 shares were traded. The wider market slipped 0.1 percent.

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