Abu Dhabi banking gains underscore UAE recovery

First Gulf Bank and Abu Dhabi Islamic Bank beat forecasts with second-quarter net profits
Abu Dhabi banking gains underscore UAE recovery
By Reuters
Wed 24 Jul 2013 01:51 PM

Abu Dhabi lenders First Gulf Bank (FGB) and Abu Dhabi Islamic Bank (ADIB) beat forecasts with second-quarter net profits on Wednesday, underscoring a strong reporting season for lenders in the United Arab Emirates.

Both registered strong growth in income from fees and commissions, reflecting an improved environment for business as the region's economy picks up.

FGB, the second-largest lender by market value in the UAE, reported profit of AED1.17bn ($318.5m), up 15 percent from the corresponding period in 2012, the company said in an emailed statement.

Seven analysts polled by Reuters had estimated an average quarterly profit of AED1.085bn.

Abu Dhabi Islamic Bank said net profit was AED371.4m, compared with AED322.6m a year ago, also beating forecasts. Two analysts polled by Reuters had predicted a AED370m and AED301m.

Banks in the UAE were expected to report strong second-quarter earnings thanks to an economic recovery in key sectors, primarily real estate, and lower provisions as the Gulf state recovers from debt troubles at Dubai's state-linked entities.

On Monday, Emirates NBD beat estimates with a 50 percent hike in net profit, while National Bank of Abu Dhabi on Tuesday missed expectations but still increased profit by 15.8 percent.

Net profit at FGB, majority-owned by Abu Dhabi's ruling family, was boosted by a 9 percent increase in net interest and Islamic financing income, and a 34 percent jump in fees and commissions.

For ADIB, fee and commissions - up 40.4 percent year-on-year - also supported earnings and loan growth was also strong.

Loans and advances at the end of the June were 9.8 percent higher than the end of 2012. Over the same period, lending growth at FGB was 7 percent.

Tirad Mahmoud, CEO of ADIB, said the strong asset growth in the opening half of this year meant the bank has a "moderately positive" outlook for the rest of the year, although global economic volatility remained a potential risk.

For FGB, expansion into Asia in the coming quarters was a key focus for the bank, its CEO André Sayegh said.

Last month, the bank bought the credit card business of investment firm Dubai Group for $164 million to expand its customer base in the UAE.

Shares in FGB and ADIB were down 0.3 and 0.6 percent respectively at 0723 GMT. Both have gained around 50 percent in 2013 as part of a wider market rally in the UAE.

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