Text size:

  • Small
  • Normal
  • Large
NBAD joined its peers in setting aside large provisions for bad loans.
NBAD joined its peers in setting aside large provisions for bad loans.

NBAD profit down, but beats forecasts

The National Bank of Abu Dhabi, the largest UAE bank by market value, reported a second-quarter profit fall of 9.3 per cent.

The National Bank of Abu Dhabi (NBAD), the largest UAE bank by market value, reported a second-quarter profit fall of 9.3 per cent but still managed to beat analyst expectations. It joined its peers in setting aside large provisions for bad loans as profit fell to Dh907 million (US$246.9m) from Dh1 billion for the second quarter last year.

Michael Tomalin, the chief executive of NBAD, said the bank was confident it would "weather these turbulent conditions", adding that it was taking "collective provisions to put us in the best possible position for the future". The bank said it had set aside Dh500m in provisions for bad loans since January, up more than three-fold from Dh145m for the first half of last year. Deepak Tolani, a banking analyst at Al Mal Capital, said the provisions were about twice as high as his bank had expected.

First-half profit came in at Dh1.67bn, down 10.6 per cent on the same period last year. The bank's chairman, Nasser al Sowaidi, said the Abu Dhabi Government's infrastructure spending would boost the regional economy. "The global outlook remains uncertain but the strong investment in infrastructural projects by the Government is expected to support the economic growth of Abu Dhabi and counter to some extent the slowdown," he said.

Tight credit, sharp declines in property values and the rising number of defaults have hurt local bank earnings this year. Most banks have reported lower second-quarter earnings because of higher provisions to protect themselves against defaulting customers. Emirates NBD, the UAE's largest bank by assets, said this week it expected bad loans to continue to rise this year before peaking next year.

NBAD said it had increased lending by 7.2 per cent since the first quarter of the year. This contrasts sharply with recent Central Bank data that shows loans to the private sector fell almost 2 per cent in the first three months of this year. Analysts said that some of NBAD's fresh lending may be loans to government organisations. Without putting the money aside, the bank's first-half operating profit would have been 8 per cent higher than the same period last year, NBAD said.

It said it had $7.5m of exposure to Ahmad Hamad Al Gosaibi and Brothers, one of two troubled Saudi family groups undergoing debt restructuring. NBAD also holds $3.4m of a sukuk issued by the Saad Group, the other Saudi company. The bank also said yesterday its board of directors had approved a buyback of 10 per cent of its shares, subject to regulatory approvals. NBAD shares rose 4.3 per cent yesterday. The bank disclosed its earnings after the market closed.

uharnischfeger@thenational.ae

Back to the top

More articles


Editor's Picks

 Would you like it in blue? An Afghan shopkeeper shows a burqa to a customer at a bazaar in Herat. (Aref Karimi / AFP /  April 13, 2014)

In pictures: Best business images for the week to April 24, 2014

Here are some of the best business images for the week to April 24, 2014.

 That's asking a lot: this four-bedroom duplex penthouse apartment  at Marina Residence in Dubai is for sale with an asking price of Dh15.7 million. (Courtesy Better Homes / April 2014)

In pictures: Palm Jumeirah penthouse listed for Dh15.7 million

A four-bedroom duplex penthouse in Marina Residence 3 on Dubai's Palm Jumeirah is on the market for Dh15.7 million.

 Room with a view from one of the 21 duplex penthouses located in the Gate Towers sky-bridge. The sports courts and swimming pools can be seen below. Courtesy Alda

In pictures: Aldar’s Gate Towers Penthouse Collection on Reem Island

Aldar launched its Gate Towers Penthouse Collection at Cityscape Abu Dhabi. The launch features 21 penthouses spanning the skybridge, with each having a private indoor pool and incredible views.

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National