The bank's net income in the first half also slid by 12%
UNB's Q2 net profit slides 18% as impairment charges rise
Abu Dhabi’s Union National Bank on Sunday reported an 18 per cent year-on-year drop in its second-quarter net profit as impairment charges climbed, while non-interest income fell.
Net profit attributable to equity holders in the three months to the end of June slumped to Dh413.4 million, the lender said in a statement to the Abu Dhabi Securities Exchange, where its shares are listed. Net impairment charges soared by 68 per cent to Dh151m at the end of the second quarter from Dh90m reported for the corresponding period in 2017, it said.
“UNB continues to maintain its strategy to cautiously pursue loan growth while managing the downside risks,” Mohammad Abdeen, the chief executive of UNB, said.
UNB's results missed the Dh432m estimate from EFG Hermes, according to Bloomberg. The government of Abu Dhabi holds a 50 per cent stake in UNB, while the government of Dubai owns 10 per cent.
Total assets slid by 2 per cent year-on-year to Dh100.6 billion. Loans and advances at the end of the first half fell by 7 per cent to Dh67.3bn from the same period a year earlier. Various business deals are in the pipeline and some of them are expected to be completed in the second half of this year, the lender noted.
“Margins continue to improve during the year on the back of increasing yield on assets compared to the cost of funds," said Mr Abdeen. "The Group is well placed to take advantage of growth opportunities …. as the region and more specifically the UAE continue to innovate and diversify for a sustainable future.”
The banks net income for the first six months of 2018 also slid by 12 per cent to Dh841m. It non-interest income fell 35 and 26 per cent for the quarterly and half yearly periods this year respectively, driven by a reduction in fees and commission income and lower gain on dealing in foreign currencies and derivatives, UNB said.
Operating expenses for the first six months increased by 2 per cent over the same period of 2017 while the lender’s cost to income ratio came in at 33.5 per cent for the first half of 2018.