Emirates NBD, the UAE's biggest bank by assets, posted a 30 per cent drop in full-year net profit, as the bank set aside money to cover bad loans.
Net profit at the bank fell to Dh2.34 billion (US$6.3 million) for last year, from Dh3.34bn in 2009, the Dubai Government-controlled bank said in a statement to the Dubai Financial Market yesterday.
In the fourth quarter net income advanced to Dh403 million from Dh178m in the year-earlier period.
The bank said it had taken full provisions for its loans to Dubai World, which reached a deal with creditors in September to delay payments on $24.9bn of debt. Its shares slipped 0.3 per cent to close at Dh3.21.
Impairments were still the focus as the bank said it had a Dh509m loss from associate companies, the majority coming from its 48 per cent stake in Dubai's Union Properties.
"We will definitely see higher impairments in the long term than what was booked," said Jaap Meijer, the head of the bank research team at Alembic HC Securities in Dubai.
Mr Meijer said he anticipated a further Dh600m in writedowns related to its property subsidiary.
"They are dragging their feet a bit and it looks like they didn't take the full hits [from impairments]," he said, though he added the bank's "dramatic" improved liquidity position was a positive mark on the its balance sheet.
UAE banks have been hurt by the global credit downturn after provisions for bad loans have climbed amid the economic slowdown, with Emirates NBD one of the more exposed to Dubai World's debt woes after lending substantial sums to the port and property conglomerate.
The bank has been positioned for future growth "through an improved funding and liquidity position, enhanced risk management capabilities and increased operating efficiency", said Rick Pudner, the bank's chief executive.
The bank announced in December it would sell a 49 per cent stake in its subsidiary Network International, a payments card vendor, for Dh2bn to Abraaj Capital, the Middle East's biggest private equity fund, as part of its efforts to get its finances in order.
Revenue for Network International was flat for last year at Dh372m. Lending for the group fell 8 per cent from a year earlier to Dh197.1bn and deposits rose 10 per cent to Dh200bn.
Net interest income declined 8 per cent to Dh6.8bn and fee and other income dropped 13 per cent to Dh2.93bn.