By Stanley Carvalho
Abu Dhabi Commercial posts first profit growth in three quarters as impact of stock market crash fades.
Abu Dhabi Commercial Bank, the UAE's fourth-largest lender by market value, beat forecasts with its first profit growth in three quarters as the impact of last year's stock market crash faded.
Third-quarter profit rose 46% to 606.7 million dirhams ($165.2 million), the bank said in a statement. It was the bank's second-largest profit ever.
Analysts' third-quarter forecasts ranged from 472.76 million dirhams to 563 million dirhams, according to a Reuters survey last month.
The bank had blamed declining profit in the first quarters on one-off income from initial public offerings (IPOs) in 2006, which dried up as shares tumbled across the region. Four of the seven Gulf Arab benchmarks fell more than 35% last year.
"The bank has successfully replaced one-off IPO profits with core income," Chief Executive Eirvin Knox said in the statement.
Losses on Abu Dhabi Commercial's investment portfolio from a global credit crunch reduced third-quarter profit by 70 million dirhams. The bank also took a 213 million capital charge in the three months to September 30 to reflect the market value of investments.
"We consider these provisions to adequately reflect the situation of our portfolio of investments in the current market environment," it said.
Defaults on US mortgages rocked global equity and credit markets in July by driving up borrowing costs and making banks more reluctant to lend.
Net loans and advances rose 31% to 70.6 billion dirhams, while customer deposits jumped 32% to 53.8 billion dirhams.
Assets as at September 30 were worth 100.4 billion dirhams, compared with 71.9 billion a year earlier.
Shares of Abu Dhabi Commercial Bank have underperformed the Abu Dhabi index, rising about 21% this year compared with 28% for the benchmark. - Reuters