UNB first quarter net profit falls 6%, misses analysts' forecasts
Abu Dhabi lender registers lower non-interest income, higher expenses
Union National Bank said first quarter profit fell 6 per cent year-on-year, missing analysts’ forecast, due to lower non-interest income and higher costs.
The Abu Dhabi based lender said net profit in the three months ending March dropped to Dh422 million from the year-earlier period, according to a regulatory filing on Sunday with the Abu Dhabi Securities Exchange, where the company's shares are traded. The government of Abu Dhabi holds a 50 per cent stake in UNB, while the government of Dubai owns 10 per cent.
The earnings came in below the average Dh455m estimate of analysts polled by Bloomberg.
Non-interest income plunged 16 per cent to Dh205m from Dh245m a year earlier. Total net interest and Islamic financing income rose 4 per cent to Dh678m from Dh652m a year earlier.
Operating expenses rose 8 per cent to Dh286m from Dh265m a year earlier as the bank sought to support business activities and invest in infrastructure and technology upgrades.
“The loan growth in the UAE banking sector has remained modest as credit demand remains soft,” said chief executive Mohammad Abdeen in the statement. “During this period, the Group has maintained its strategy to pursue loan growth on a selective basis. Margins improved during the quarter as yield on assets increased more than offsetting the increase in cost of funds.”
Some banks in the UAE are posting lower profit credit demand as oil prices though on the rise, remain lower than levels seen three years ago. Banks are also becoming more selective in extending loans, particularly to small and medium sized enterprises.
UNB’s net loans and advances fell 3 per cent to Dh69.1 billion at the end for March compared with end of March 2017 partly due to “overall softer credit demand and impact of IFRS 9 transition adjustment.”
UNB sold in March a $500 million 5-year senior unsecured bond, its first foray into the international debt capital market since 2016.
Updated: May 13, 2018 02:17 PM