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ADIB’s falling profit rounds up mixed results season for Abu Dhabi banks

Abu Dhabi Islamic Bank saw profits fall in the fourth quarter while peer Union National Bank reported a surge in revenues on Tuesday, rounding up a mixed results season for Abu Dhabi lenders.

The emirate’s five domestic banks are battling tight liquidity and rising bad loans due to the economic impact of lower oil prices.

Loan and deposit growth remain in single digits and banks continue to book provisions for bad or doubtful loans.

ADIB, the emirate’s largest sharia-compliant bank made a net profit of 455.1 million dirhams ($124 million) in the three months ending Dec. 31, down 4.7 percent. Revenues fell 2 percent while provisions rose by 1.2 percent over the same quarter of 2015, the bank said in a statement.

Prospects for the United Arab Emirates as a whole for 2017 are encouraging, and supported by a recovery in oil prices, said ADIB Chief Executive Tirad Mahmoud.

“Nonetheless, we continue to forecast modest customer financing growth in the UAE and an increase in provisions in the UAE retail banking,” he said.


UNB, in contrast, said its fourth-quarter net profit jumped 29 percent to 251 million dirhams, helped by a sharp fall in provisions.

The bank, which is 50 percent owned by the Abu Dhabi government, reported operating income of 905 million dirhams, up 5 percent on a year earlier, as impairments tumbled 21 percent to 313 million dirhams.

Tight competition and pressure on margins has led to consolidation in Abu Dhabi’s banking sector, with National Bank of Abu Dhabi and First Gulf Bank in the process of merging to create one of the largest banks in the Middle East and Africa.

Last month NBAD, the emirate’s biggest lender by assets, reported a 28 percent rise in fourth-quarter net profit to 1.33 billion dirhams last month.

In contrast, FGB’s fourth-quarter net profit fell 11 percent to 1.53 billion dirhams and Abu Dhabi Commercial Bank, the emirate’s second largest bank by assets, saw its profits drop 16 percent to 1 billion dirhams as impairments for doubtful loans weighed.