Abu Dhabi Islamic Bank (ADIB), the country's second largest Islamic bank by assets, has announced a 22 per cent increase in its annual net profit for last year, to Dh791 million (US$215.3m). Banks throughout the Emirates have been expected to report a decline in net profit for the final three months of last year, following losses relating to the financial crisis and provisions on loans. However, ADIB reported a 6.1 per cent increase in net profits for the final quarter of last year, from Dh245m in 2007 to Dh260m, despite poor market conditions. "Overall, the results are positive given the market's turbulence in 2008, particularly in the last quarter," said Tirad Mahmoud, the company's chief executive. The bank decided to take Dh335m in provisions to prepare for the possibility that loan quality could continue to deteriorate "across the board", Mr Mahmoud said. "We have taken steps to make sure that as we go into 2009 we have some set aside for surprises, and surprises we will have." Analysts expect UAE banks to fare better than western banks, almost none of which are expected to announce a profit for last year. By contrast, every bank in the Emirates so far has announced an annual net profit for last year, buoyed by strong earnings up to Sept 30 last year. "Given the profits that they did continue to make in 2008, the banks are still in relatively strong shape to deal with what is going to be a difficult and challenging year this year," said Andrew Gilmour, an economist at the Samba Financial Group. ADIB provides Islamic consumer banking and investment banking services, but does not have a large home-loan business. According to Mr Mahmoud, the bank's Islamic principles have helped it fare better than others during the financial crisis. "Islamic banks have avoided the brunt of the global financial crisis simply because they apply more prudent banking practices," he said. "We don't do a lot of the stuff that international banks do willy-nilly simply because they need to make more money." Results were also announced for the Abu Dhabi Islamic Bank Group, which includes the bank itself, along with several subsidiaries such as Burooj Properties, and Abu Dhabi Islamic Financial Services. The group posted a 60 per cent drop in net profit in the fourth quarter from the year before to Dh114.7m, but an 11 per cent rise in annual net profit, to Dh851m. Emirates NBD, the country's largest bank by assets, is expected to release its annual results today, following a meeting of its board of directors. Mashreqbank, the country's fifth largest bank, is expected to report on Sunday. Late on Tuesday, Union National Bank (UNB) announced a 22 per cent increase in its annual net profit, which rose to Dh1.441 billion last year. However, the bank's fourth-quarter net profit dropped by 70 per cent to Dh100m. The bank described the results as "satisfactory" given what it called "the extremely challenging business environment and difficult trading conditions that exist globally". UNB did not provide quarterly data in the statement, but its fourth-quarter profit could be determined using data provided in previous quarterly statements. The bank has announced a Dh1.34bn net profit for the first three quarters of last year, and a Dh335m net profit for the final quarter of 2007. "Amid the global financial turmoil and the unprecedented economic downturn facing most of the major economies in the world, the results for UNB Group for the year ended 31 December 2008 were satisfactory with the UNB Group posting its highest-ever profit," said Mohammad Nasr Abdeen, the bank's chief executive. First Gulf Bank, which reported last week, showed positive results for the final quarter of last year in an announcement, posting an 8 per cent rise in its net profit compared with the year before. By contrast, National Bank of Abu Dhabi showed a 34 per cent decline in its net profit for the final quarter, although it also had positive annual growth. Last week, ADIB and UNB each received Dh2bn of a total Dh16bn capital injected into five banks by the Abu Dhabi Government. First Gulf Bank and National Bank of Abu Dhabi each received Dh4bn. Moody's, a ratings agency, said in a report: "Abu Dhabi's recent decision to inject Dh16bn of fresh tier-one capital into its banks has raised concerns among some observers, who have interpreted this as a sign that Abu Dhabi is becoming more reticent about supporting banks and other systemically important entities in other emirates. Moody's will continue to monitor developments closely. If a trend of selective treatment within the federation becomes discernible, Moody's stands ready to reduce its high support assumptions for government-owned companies in other emirates outside Abu Dhabi." email@example.com
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