Ajman Bank, the UAE's newest publicly-listed lender, Wednesday reported a Dh13.6 million (US$3.7m) loss in the three months to June. The Islamic bank, which listed shares on the Dubai Financial Market in February, said in a statement that the second-quarter loss was expected as it expands its branch network. Ali Al Mueen, the bank's acting chief executive, said earlier this week that the bank hoped to open 10 new branches next year.
The bank is also looking to develop its property-related business. In March, it signed an agreement with the Ajman Real Estate Regulatory Agency (ARRA) to accept escrow payments from developers. As is the case in Dubai, developers in Ajman are required to place money they receive from investors into these accounts for use exclusively on construction of projects. Despite its losses, the bank said it is actively searching for places to invest spare capital, aiming to leverage a strong cash position to increase returns to shareholders. Earlier this week, Mr Mueen said the bank may invest in the second tranche of a $20 billion bond issue by the Dubai Government to assist the emirate's ailing state-controlled companies.
"At this stage, we have additional liquidity and we can go for any sound investment. Dubai bonds are a very secure type of bonds, so why not?," he told Reuters. With its Dh11.6m loss in the first quarter of the year, Ajman Bank's second-quarter losses bring total losses over the lender's operating history to Dh22.17m. Officials at the bank said they hope to turn to profitability by the end of the year.
"It is only natural that the operations of a financial institution in its first year may not reflect such positive financial results," Mr Mueen said in a statement. "In spite of that, the financial results of the first and second quarters were better than predicted and match up with any recently established financial institution." With Ajman Bank's results Wednesday, all publicly-listed UAE-based lenders have now released second-quarter performance figures. Together they booked profits of Dh5.19bn, down by 27 per cent compared to the second quarter of last year, when profits were Dh7.1bn.
Many banks in the UAE and across the region have seen profits decline as they set aside cash to buttress against a rise in bad loans. Ajman Bank was the only UAE bank to record a second-quarter loss. afitch@thenational.ae
