Abu Dhabi banks post mixed Q3 results; ADCB surges

ABU DHABI - Two of Abu Dhabi’s largest banks posted mixed third-quarter results and booked heavy provisions for loan losses, signalling that a full-fledged recovery in the sector still has a long way to go.

By (Reuters)

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Published: Tue 26 Oct 2010, 10:28 PM

Last updated: Mon 6 Apr 2015, 11:45 AM

National Bank of Abu Dhabi’s (NBAD) net profit was flat, while smaller rival Abu Dhabi Commercial Bank (ADCB) saw profits surge thanks to trading and investment income.

Dubai-based Emirates NBD (ENBD) had said on Wednesday a spike in bad loans and a provision for exposure to debt-laden Dubai World more than halved its quarterly net profit to well below analysts’ forecasts.

NBAD, the largest lender by market value in the UAE, reported a net profit of 920 million dirhams ($250.5 million) compared with 914 million dirhams in the same quarter last year, missing the 982 million dirhams forecast by analysts.

“The overall results of NBAD are positive with strong revenues as well as good balance sheet growth,” said Shabbir Malik, banking analyst at EFG-Hermes.

Abu Dhabi Commercial Bank made a profit of 325 million dirhams in the three months to Sept. 30, significantly more than the 34.8 million it made in the same period last year. The profit was driven mainly by growth in trading and investment income, which stood at 145 million dirhams for the quarter.

“The non-interest income is a one-off, there is a possibility that there was a higher contribution from the associates,” said Sofia al Boury, assistant vice president, research at investment bank Shuaa Capital.

NBAD said net impairments in the quarter reached 320 million dirhams and totalled 783 million for the first nine months.

ADCB’s impairment allowances were 656 million for the third quarter and 2.64 billion for the first nine months of the year.

ADCB is one of the region’s most exposed banks to indebted conglomerate Dubai World and one of two UAE banks on an informal seven-member coordinating committee negotiating the company’s restructuring plan.

“We expected provisions to be slashed as ADCB cleared up its balance sheet of Dubai World earlier. But it still has exposures to clean,” said Shuaa Capital’s Al Boury.

The bank had booked about 1.1 billion dirhams in provisions in the second quarter this year.

In September, Goldman Sachs raised its rating on ADCB to “buy” from “neutral”, saying banks in the United Arab Emirates are adequately capitalised to generate sufficient operating income to absorb higher loan losses.

The bank raised $750 million from a Malaysian ringgit bond in August under the bank’s 3.5 billion ringgit medium-term programme which attracted strong demand.

ADCB completed the acquisition of Royal Bank of Scotland’s retail banking business in the UAE this month, gaining 1,000 RBS retail banking staff and over 250,000 RBS retail customers.

With customer loans at 2.1 billion dirhams and customer deposits at 2.3 billion, the acquisition opens opportunities for ADCB, doubling its credit card business, a bank statement said.

Shares of both lenders did not trade on the Abu Dhabi bourse Tuesday pending results.

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