Abu Dhabi Islamic Bank said second-quarter profit rose by 5 per cent, supported by higher commission and income fees. The rise came despite a sharp increase in provisions in the quarter.
The country's second-biggest Islamic lender reported a net income of Dh316 million in the quarter ended June 30, up from Dh301.6m in the same period last year, beating a consensus of analyst estimates on Bloomberg News by 20 per cent. Revenues increased to Dh909.6m in the quarter, up 22.2 per cent from Dh744.2m in the same quarter last year. Credit provisions and impairments were at Dh235.8m, up 75.2 per cent from the same period last year.
The bank booked Dh148.9m in provisions in the quarter. It took an additional Dh86.9m in impairments against its property portfolio. ADIB said global uncertainty and regulatory oversight on the market would mean a challenging period ahead and expected to post single-digit growth in both assets and liabilities this year.
"While the brunt of the legacy portfolio's cost of credit was absorbed in 2009, and we took further action in 2010, we expect to continue to take prudent measures as necessary for both the bank and specifically Burooj [property] portfolios during the course of the year," the bank said in a statement to the Abu Dhabi bourse. The bank said its transaction banking and investment banking operations had experienced a 62 per cent rise in fee and commission income.
However brokerage operations had had a challenging quarter because of low volumes and market uncertainty. Nonetheless, ADIB posted a profit for this sector of Dh800,000 in the second quarter.
The bank said last week it had won regulatory approval from the Qatar financial regulatory authority to open an Islamic bank even after a central bank circular in that country had ordered conventional lenders to stop operating Islamic branches.
The bank would be permitted to carry on regulated activities in relation to deposit taking, providing and arranging financing facilities and managing investments, ADIB said. The bank was suspended from trading on the Abu Dhabi Securities Exchange as the filings were released to the market. Shares have jumped 10.4 per cent this year to Dh3.27.