Most residents could expect a fair to partly cloudy day ahead
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Net income in the three months to March 31 fell 4.7 percent to 601 million dirhams ($163.6 million), or 0.38 dirhams per share, compared with 630.62 million dirhams, or 0.40 dirhams per share, in the year-earlier period, the state-controlled lender said in a statement on the Abu Dhabi bourse Web site on Tuesday.
General, administration and other operating expenses surged 45 percent to 225 million dirhams.
Costs rose on “investment in the brand, in new technology, and the bank’s new businesses, such as Islamic and private banking, and in premises,” Michael Tomalin, the bank’s chief executive officer, told Reuters in Abu Dhabi.
”Our costs last year grew only 12 percent, which was low compared to others, so this year was catch up,” Tomalin said.
The Abu Dhabi controlled lender plans to open a Swiss-based private banking unit on June 1 and a unit that complies with Islamic law on July 1, Tomalin told Reuters in January.
The sharia-compliant unit will have an authorised capital of 500 million dirhams and paid-up capital of 200 million dirhams, Tomalin said at the time.
NBAD, whose shares have surged 25 percent this year, may open as many as four Islamic branches in the UAE in 2007, Tomalin told Reuters in November. [ID:nL02753165]
The Swiss unit, aimed at wealthy Arabs with accounts and holiday homes in Switzerland, could account for 5 percent to 10 percent of the bank’s revenue within three years, he said.
Expansion
NBAD is planning to open as many as 20 branches in the UAE this year.
Analysts polled by Reuters last month forecast the bank’s first-quarter profit at an average 592.88 million dirhams. [ID:nL30309866]
Net income from fees and commissions was largely unchanged at 225.5 million dirhams, according to the bank’s statement. Net interest income rose 4.2 percent.
Islamic banking’s share of the UAE market has tripled to 15 percent since 1999, Tomalin said in November. NBAD expects the Islamic unit to account for as much as 5 percent of total revenue within five years.
The lender also plans to expand its network of branches in Oman and Sudan, and enter Qatar, to tap growing wealth and reduce its reliance on its home market, Tomalin has said.
It may add as many as six branches to its network in Oman by 2009 as it seeks to rival HSBC Holdings Plc HSBA.L as the largest foreign lender there, Tomalin said.
Gulf Arab lenders like NBAD and National Bank of Kuwait NBKK.KW are expanding overseas as competition in their home markets intensifies, and as they seek to rival international banks like HSBC and Standard Chartered Plc STAN.L looking to tap the Middle East’s oil-driven wealth.
Domestic rivals National Bank of Dubai NDB.DU and Emirates Bank International EBIL.DU this month hired Goldman Sachs & Co. to advise on merging to create the Gulf’s biggest lender by assets, and compete more effectively against regional and international banks.
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