Three major UAE banks kicked off the earnings season yesterday with reports of sharp profit increases.
Earnings from lending and mortgages grew while non-performing loans decreased amid improving consumer confidence and rising appetite for borrowing.
Abu Dhabi Commercial Bank (ADCB), the country’s third-largest lender, said net profit for the three months to the end of September, surged 47 per cent from a year ago to Dh920 million.
Ras Al Khaimah’s RAKBank said net profit for the first nine months rose 9.6 per cent year-on-year to Dh1.14 billion.
The Sharjah-based United Arab Bank reported a 39 per cent jump in net profit for the first nine months to Dh414m.
The three banks attributed their performance to fewer bad debts, a slight increase in lending, and higher earnings from fees, currency transfers and the cross-selling of financial products.
“Banks are producing strong earnings growth this year … because the economic recovery in the UAE means that the loans that they already have are performing better and … they are lending more to new customers,” said Tariq Qaqish, the head of asset management at Al Mal Capital.
“These are very strong numbers and we expect to see strong numbers from the other UAE banks reporting this quarter.”
ADCB said income from loans and Islamic financing for the last quarter rose 2 per cent to Dh1.4bn from last year. On a nine-month basis, the figure stood at Dh4.1bn, up 4 per cent from the previous year.
The bank said income from its other operations rose to Dh454m, up 37 per cent from last year. It said that was mostly the result of having repaid Dh4bn in government loans taken out during the global financial crisis.
Ala’a Eraiqat, the chief executive of ADCB, said the revenue growth reflected demand, while its management of costs lifted profitability.
It was a similar story at RAKBank, which reported a 5.5 per cent rise in earnings from loans, advances and Islamic financing in the first nine months to Dh1.75bn.
Non-performing loans currently comprise just 2.3 per cent of its loan and Islamic finance portfolio.
RAKbank, one of two Middle Eastern banks that fell victim to a US$45m cyberattack last December, said its balance sheet was boosted by higher fees on currency transfers, and the cross-selling of insurance and wealth-management policies. Income from these businesses grew 20 per cent to Dh587.8m during the period.
Meanwhile, the fast-growing United Arab Bank said customer loans and advances increased to Dh14.8bn at the end of September from Dh10.9bn last December.