Abu Dhabi's ADCB sees profit jump 34% in Q2

Steeply lower provisions boosts performance of Abu Dhabi Commercial Bank
Abu Dhabi's ADCB sees profit jump 34% in Q2
RATINGS BLOW: ADCBs exposure to Dubai World, and its high single-party concentration has prompted S & P to degrade the rating points. (Getty Images)
By Reuters
Tue 24 Jul 2012 05:46 PM

Abu Dhabi Commercial Bank's (ADCB) second quarter profit topped forecasts on Tuesday thanks partly to steeply lower provisions.

The UAE's third biggest lender by market value posted net profit of AED733m ($199.6m) for the three months ended June 30, down from AED1.3bns in the prior-year period.

In the second quarter last year, ADCB booked a $357m one-time gain on the sale of its 25 percent stake in Malaysia's RHB Capital to Abu Dhabi fund Aabar Investments. .

Analysts had forecast average profit of AED679.5m, according to a Reuters poll.

ADCB, nearly 60 percent owned by the Abu Dhabi government, saw a 34 percent year-on-year growth in net income and Islamic financing income in the second quarter, with the AED1.38bn outstripping the AED1.04bn made in 2011.

The bank also posted strong second-quarter operating income growth, up 24 percent over the prior-year period.

Impairment allowances for the second quarter totalled AED492m, ADCB said in a statement, down 47 percent from the corresponding period in 2011.

Compared to the end of 2011, deposits were up 2 percent at AED111.2bn but loans and advances were down 1 percent at AED123.5bn.

ADCB's lending growth will remain muted at 2-3 percent in 2012 as the bank looks at deleveraging its balance sheet owing to the lack of lending opportunities and a focus on better quality loans, Bahraini investment bank SICO said in a research note published June 21.

In a recent note affirming ADCB's rating at A+, Fitch noted the high probability of support for the lender from UAE authorities if needed.

Half-year profits stood at AED1.54bn compared to AED1.92bn in the first half of 2011, skewed by the RHB sale.

Shares in ADCB, which were halted pending the results on Tuesday, have risen 21.6 percent year-to-date outperforming the main Abu Dhabi index which is up 2.8 percent.

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