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Earnings impaired: Listed banks’ Q3 report card

The third quarter of 2016 was a generally lacklustre earnings season for banks in the UAE, reflecting a trickier operating environment as a more-than-two-year collapse in oil prices feeds through into higher levels of bad loans and compressed net interest margins.

Here’s how major banks listed on the bourses of Dubai and Abu Dhabi performed in Q3:

National Bank of Abu Dhabi (NBAD)

The UAE’s largest lender by assets posted flat third-quarter net profit as it was hit by a rise in bad loans.

NBAD, which is currently in a merger process with rival First Gulf Bank, made a net profit of AED1.32 billion in the three months ending September 30. This compared with AED1.33bn in the same period a year earlier.

The bank’s impairments jumped 68 per cent in the third quarter to AED287 million, compared with the same period a year ago.

Emirates NBD (ENBD)

Dubai’s largest lender reported a one per cent drop in Q3 net profit as costs rose and net interest income slipped. The bank made a net profit of AED1.66bn in the three-month period, compared with AED1.67bn a year earlier.

ENBD’s earnings also took a hit from additional provisions set aside for Emirates Islamic, its sharia-compliant arm, to cover bad loans in the small and medium-sized enterprise sector.

Net interest income fell two per cent in the third quarter from a year earlier due to higher cost of fixed deposits and wholesale funding.

First Gulf Bank (FGB)

The third-largest lender by assets in the UAE was the only major bank to report strong growth in net profit during the July-September period. The bank posted a 31 per cent rise in quarterly net profit to reach AED1.86bn from AED1.37bn in the same period a year earlier.

Abu Dhabi Commercial Bank (ADCB)

The second-largest bank by assets in Abu Dhabi posted a 17 per cent fall in third-quarter profit due to higher impairments and lower interest income.

It made a net profit attributable to shareholders of AED999.1m, compared to AED1.20bn in the same period a year ago.

ADCB booked higher impairments of AED380.4m in the quarter, compared to AED66.0m in the year-ago period.

Abu Dhabi Islamic Bank (ADIB)

Abu Dhabi’s largest sharia-compliant bank reported nearly flat net profit in the third quarter hit by rise in bad loans as a result of the economic impact of lower oil prices.

It made a net profit of AED508.9m, up 1.1 per cent from AED503.2m in the same period a year ago.

Dubai Islamic Bank (DIB)

The UAE’s largest Islamic lender posted a 9.9 per cent drop in third-quarter net profit, partly due to a rise in impairment charges.

The bank made AED876.3m during the period between July and September. This compares with a profit of AED972.1m in the corresponding period of 2015.

Mashreq Bank

Mashreq, Dubai’s third-biggest lender by assets, posted a 24.8 per cent fall in third-quarter net profit, weighed by putting aside more cash to cover for bad loans.

The lender made a net profit of AED414.95m, a decrease on the AED551.44 m recorded for the corresponding period of 2015.

Union National Bank (UNB)

UNB’s Q3 net profit was AED410m, down by 15 per cent from AED483m in the same period in 2015.

The lender’s net profit attributable to equity holders in the third quarter was AED406.64m versus AED480.59m in the prior-year period.