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Wed 28 Jul 2010 05:37 PM

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Abu Dhabi's First Gulf Bank Q2 net up

Bank's profit rises two percent but misses forecasts; provisions up 47 percent in second quarter.

Abu Dhabi's First Gulf Bank Q2 net up
PROFIT RISE: Abu Dhabis second-largest bank by market value posted a profit of AED787mfor the three months to June 30.(ITP Images)

Abu Dhabi's First Gulf Bank missed forecasts with a 2 percent rise in second-quarter profit on Wednesday though its chief executive expressed confidence in revenue growth from core operations.

Abu Dhabi's second-largest bank by market value posted a profit of AED787m ($214.3m) for the three months to June 30.

That was up from 775.2 million dirhams from a year earlier but fell short of the 865.8 million forecast by analysts polled by Reuters.

Revenues rose 12 percent to 1.467 billion dirhams and net interest income increased 9 percent to 1.043 billion.

"I would like to reconfirm, that our Core Banking business will undoubtedly continue to be of ultimate strategic importance to the Group. The power of revenue generation has a growing momentum," CEO Andre Sayegh said in a statement.

Loans and deposits grew 4 percent and 2 percent respectively.

Impairments stood at 903 million dirhams at the end of the first half, after the bank booked 411 million dirhams in second quarter.

"Overall good numbers with strong core interest revenues supported by high net interest margins and strong fee income although balance sheet growth was slower than expected," said Sofia al Boury, assistant vice president for research at Shuaa Capital.

"There is more pressure on non-performing loans (NPLs) but there is also more than adequate coverage which is a good sign."

NPLs were 2.5 percent of total gross loans but the bank has provisions coverage of 126 percent, the bank said.

Shares in FGB ended flat but are down 10 percent this year. The earnings were released after trading closed on the Abu Dhabi bourse ADI.

National Bank of Abu Dhabi (NBAD) and FGB, the two largest banks in the UAE, have weathered the crisis in the banking sector better than lenders in neighbouring Dubai, whose debt crisis has left major banks with large exposures. Sayegh said in February he expected double digit growth in profit, credit and deposits in 2010, and said there were plans to expand domestically and overseas. (Reuters)

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