UAE's biggest lender posts 2% rise in Q2 profit

National Bank of Abu Dhabi says quarterly result boosted by higher net interest income
UAE's biggest lender posts 2% rise in Q2 profit
Michael Tomalin, CEO, NBAD
By Reuters
Tue 24 Jul 2012 04:48 PM

National Bank of Abu Dhabi, the largest lender by market value in the UAE, reported a two percent rise in quarterly profit on Tuesday due to higher net interest income, meeting forecasts.

NBAD had second-quarter net profit of AED1.05bn ($284.8m), up from 1.03 billion dirhams in the same period a year earlier, the bank said in a statement.

Analysts had forecast an average profit of AED1.031bn in a Reuters poll.

Net profit for the first half of the year rose 6.9 percent to AED2.08bn compared to AED1.95bn in the opening six months of 2011.

The improvement in top-line revenue was due to higher net interest income and net income from Islamic financing contracts, the bank said, which grew 4.6 percent in the first half of 2012 compared to the same period last year.

"The group has not changed its forecasts for 2012," said chief executive Michael Tomalin who is slated to retire this year.

"Assuming continuing current market conditions, (we expect) mid to high single digit growth in earnings for the year with non-performing loans peaking round 3.75 percent of performing loans by year end or early 2013."

The bank booked net impairment charges of AED292m in the three months to June 30, a drop of 12 percent on the same period last year. Provisions for the first six months of 2012 were down 13.2 percent due to lower collective provisions and strong recoveries, the statement said.

Non-performing loans increased to AED5.34bn, accounting for 3.18 percent of the loan book. At the end of the second quarter of 2011, they stood at AED4.17bn, or 2.65 percent of the loan book.

Operating income for the quarter reached AED2.07bn, up 3.2 percent over the same period last year. The corresponding period of 2011 yielded AED2bn.

Loans and advances grew to AED162.8bn at the end of the second quarter, up 2.1 percent on the end of 2011 and 6.4 percent on the same point last year.

Short-term government deposits worth AED27.2bn, which had been placed with NBAD in the first quarter, were withdrawn in the second, meaning a 14.5 percent quarter-on-quarter slump in deposits at the bank.

Compared to the end of 2011, deposits were up 5.7 percent to AED162.8bn.

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