Abu Dhabi Commercial Bank reported a 16 per cent fall in fourth-quarter net profit on Tuesday as impairments rose.
Abu Dhabi’s third-largest lender by assets made a profit of Dh1 billion in the three months to December 31. This compares with a profit of Dh1.19bn a year earlier.
The average forecast of three analysts surveyed by Reuters was for a fourth-quarter net profit of Dh978.7 million.
The bank booked provisions of Dh437m for the fourth quarter compared with Dh110m a year earlier.
For the full year, net profit came in at Dh4.15bn, 16 per cent lower than the Dh4.92bn recorded in 2015.
“The lingering effects of low oil prices on economic activity resulted in a tightened liquidity environment that has driven cost of funds and impairment allowances higher across the banking sector,” said Ala’a Eraiqat, chief executive of ADCB.
The lender’s board has proposed a cash dividend of 40 per cent for 2016 compared with 45 per cent in 2015.
The Egyptian investment bank EFG-Hermes has forecast that profit at nine UAE banks it covers would fall by 8 per cent year-on-year in the fourth quarter because of a rise in provisions and tighter spreads. It forecast ADCB’s net profit would decline 18 per cent year-on-year to Dh980m.
Abdul Aziz Al Ghurair, the head of the UAE Banks Federation, said in November that banking sector profits could fall between 10 and 20 per cent for 2016 versus 2015 as a slowing economy took its toll on loan growth.
ADCB said in January that its main shareholder, the Abu Dhabi Investment Council (Adic), now owns 62.5 per cent of the lender after a capital reduction. Adic, an investment arm of the Abu Dhabi Government, previously held a 58 per cent stake.
The increase in Adic’s stake follows a stock buyback programme that began in 2013 and concluded in January 2015.
dalsaadi@thenational.ae
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