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Sun 18 Jul 2010 10:12 PM

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Abu Dhabi Islamic CEO sees double digit growth in H2

Bank's deposits grew to $14.3bn, ending Q2 up 25% over the same period last year.

Abu Dhabi Islamic CEO sees double digit growth in H2
PROFIT GROWTH: UAE based Abu Dhabi Islamic Bank said that it would post double digit profit growth for the remainder of the year after its Q2 profits were higher than forecast. (Getty Images)

UAE lender Abu Dhabi Islamic Bank said it will post double digit profit growth for the remainder of the year after second quarter net profit came in above analysts' forecasts.

The bank, the second largest Islamic lender in the UAE, made a net profit of $82.1 million in the three months to June 30, up 56 percent from $52.5 million in the same period last year, helped by lower provisions.

Analysts at EFG Hermes had estimated second quarter profit of $68.3 million.

Speaking to Reuters in a phone interview, Tirad Mahmoud, CEO, said: "Our plan is to continue to show double digit growth for the rest of the year across the board (profit, deposits and loans)."

ADIB said total credit provisions in the second quarter fell to $36.6 million from $46.6 million a year ago and total provisions stood at $525.4 million at the end of the quarter.

The bank's deposits grew to $14.13 billion, ending the second quarter up 25 percent over the same period last year, while loans reached $12.3 billion, up 20.7 percent, according to the statement.

Mahmoud said the bank's liquidity is strong and more than $2.72 billion of its excess liquidity is in the UAE interbank market despite low EIBOR rates.

Growth is also due to an increased demand for sharia-compliant products, he added.

He said: "Islamic banking in the UAE and the GCC continues to enjoy better growth than conventional banks and this is demand-related," adding Islamic banks would continue to grow at a faster rate than conventional banks.

ADIB is close to opening its first branch in Baghdad this month and is awaiting technical issues to be sorted out, he said. The bank is also on track to convert its Egyptian affiliate National Bank of Development into a subsidiary as it transforms into a fully Sharia compliant bank by the end of 2010, he added.

Asked if the lender plans a sukuk issue, he said "not in the near future."

ADIB's real estate subsidiary posted a loss of $8.57 million in Q2 versus a profit of $571,754.4 in the first quarter.

Mahmoud said: "We expect the rest of the year to remain challenging for Burooj as market supply and demand factors depress values in the real estate sector."

But the bank's stock brokerage subsidiary posted a profit of $408,396 in Q2 despite the tough times faced by financial markets.

Shares in ADIB had closed before the announcement was made, ending down 0.4 percent at 2.45 dirhams. (Reuters)

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