Emirates Islamic Bank reports a loss for the quarter as provisions for bad debts spike.
Bank suffers loss after surge in provisions
Emirates Islamic Bank, the Sharia-compliant lender based in Dubai, has reported a third-quarter loss of Dh121.8m (US$33.1m), down from a profit of Dh12.5m a year earlier.
A 29.1 per cent rise in provisions for bad debts to Dh189.7m weighed down the bank's earnings, alongside losses from investments that more than tripled to Dh42.4m.
Emirates Islamic Bank also received lower income from its parent, Emirates NBD, which fell 66.7 per cent to Dh35.1m.
Net loans and advances have fallen 13.9 per cent since the start of the year even though the bank's management said it would resume "aggressive" lending.
This month, Emirates NBD was ordered to acquire Dubai Bank, the troubled Islamic bank rescued by the emirate's Government in May.
Rick Pudner, Emirates NBD's chief executive, said this month the bank was seeking "synergies" between its two Islamic lenders, but it does not plan to merge them.
It has been a tough quarter for Islamic banks. Abu Dhabi Islamic Bank reported a 1.5 per cent increase of profits yesterday as it took large quantities of precautionary provisions, with profits weighed down by Burooj Properties, a subsidiary. But Islamic banking units have grown rapidly for conventional banks, with Abu Dhabi Commercial Bank's income from Islamic financing increasing tenfold during the quarter and National Bank of Abu Dhabi's Islamic financing income increasing by 25.1 per cent.
Dubai Islamic Bank is expected to report today a decrease in profits of 8.9 per cent to Dh245.5m, according to analysts polled by Bloomberg News.