First Abu Dhabi Bank (FAB) has reported a net profit of AED2.56bn ($697.5m) for the second quarter of this year, the first quarterly earnings for the lender after being established as a merged entity at the end of March 2017.
The net income drop by AED2.56bn from the same period last year, primarily, reflecting slower business momentum year-on-year, the lender said in statement to Abu Dhabi Securities Exchange (ADX), where its shares are traded.
FAB, which was set up by combining balance sheets of First Gulf Bank and National Bank of Abu Dhabi, two of Abu Dhabis biggest banks, said that the group income for first the half of 2017 improved by 4 per cent to AED5.49bn, which translates into annualised earnings of AED0.97 per share.
The group recorded revenues of AED9.85bn as substantial cost synergies post-merger, drove performance, FAB said without specifying the cost savings. Impairment charges for non-forming loans during the first half also declined by 8 per cent year-on-year on the back of higher recoveries, it added.
The bank reported total assets of AED624.6bn, a 4 per cent decline from AED649.1bn recorded at the end of December 2016. Loans and advances also recorded a 4 per cent year-to-date drop to AED321bn, while customer deposits declined marginally to AED377bn for the same period.
FABs performance in the first half of 2017 demonstrates the Groups resilience during a period marked by softer economic conditions, FABs group chief executive Abdulhamid Saeed said in the statement.
Earning season is well underway in the UAE and the most of the major banks have reported improved earnings, despite a dull economic backdrop and the ongoing Qatar crisis. The UAE is part Saudi Arabia led group of the Arab nations that have cut diplomatic and transportation links with Doha, accusing the gas-rich nation of meddling into their international affairs and supporting and financing terrorism.
Despite regional and global economic uncertainties, lenders in the UAE will post profit growth of around 5 per cent in the second half of 2017, similar to the first six months as bad loans continue to ease, according to Abdulaziz al-Ghurair, who is the chairman of the UAE Banks Federation (UBF) and chief executive of Mashreq, Dubais third largest lender by assets.
If you look at the bank results that have come in so far, collectively there is a growth of five percent, al-Ghurair was quoted as saying by news agency Reuters. Despite what you see all around us, if you compare it to the rest of the world, this is a fantastic result.
He said that the banks had set aside full coverage for bad loans that acted as a shock absorber for the banking sector.
The level of business people fleeing the country with unpaid debt had improved dramatically as well and the level of provisions banks would take in 2017 would likely be around half the level of the previous year, he said.
The level of business people fleeing the country with unpaid debt had improved dramatically and the level of provisions banks would take in 2017 would likely be around half the level of the previous year, said al-Ghurair. Economic activity has improved since 2015, when low prices for oil and other commodities and a strong dollar heightened problems for some small businesses. In response, the UBF set up a panel to help struggling business people renegotiate their debt with banks.