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Wed 29 Jul 2009 10:44 PM

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ADIB sees Q2 profits slump 30%

Abu Dhabi Islamic Bank says expects rest of year to be tough as credit environment remains weak.

ADIB sees Q2 profits slump 30%
PROFITS SLUMP: Abu Dhabi Islamic Bank books higher provisions and confirms loss at real estate unit. (Getty Images)

Abu Dhabi Islamic Bank on Wednesday reported a 30 percent drop in net profit to AED193.4 million - largely due to a rise in loan provisions to AED171.4 million and a net loss of AED14.4 million at its Burooj real estate unit.In a statement CEO Tirad Mahmoud said: ''The credit environment remains weak and we expect the rest of this year to remain challenging with further provisioning necessary.

''In early 2008 we started to build our provisions given our then view of the deepening economic downturn. While there are now some signs of recovery we will continue with our conservative approach.

''We are actively engaged with our clients who have been impacted by the current economic conditions and are working with them to develop solutions that will enable them to meet their commitments,'' he added.

The Islamic lender said it took AED171.4 million in provisions against credit losses during the second quarter of 2009.

The loss at Burooj meanwhile contrasted with a net profit of AED141.8 million in the same period last year. However, Mahmoud said that while the real estate sector remains under pressure the environment is improving and he expects Burooj to return to profitability before the end of the year.

Looking ahead, he said the bank’s wealth management business is expected to come on stream later this year, providing real support to ADIB’s private banking franchise.

Expectations also are that a pick-up will be seen in the firm's business banking and corporate banking units.

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