The bank booked profits of Dh775 million in the quarter ended June 30, down from Dh808.41mn in the second quarter of last year, the bank said in a statement.
First Gulf Bank says Q2 profits fall on loan provision
First Gulf Bank (FGB), an Abu Dhabi-based lender, yesterday announced a fall of 4.3 per cent in second-quarter profits as it set aside Dh260 million in provisions to cushion against bad loans, including loans to two troubled Saudi conglomerates. The bank booked profits of Dh775 million in the quarter ended June 30, down from Dh808.41mn in the second quarter of last year, the bank said in a statement.
FGB yesterday became the first lender in the UAE to say in its second-quarter earnings announcement that it has made provisions specifically to cover exposures to the Saad Group and Ahmad Hamad Algosaibi and Brothers, both of which are undergoing large debt restructurings. Provisioning, or money set aside to account for expected defaults on loans, stood at Dh1.6 billion at the end of the second quarter, representing 1.8 per cent of the value of all the bank's loans. This "includes an adequately earmarked provision for FGB's exposure to Al Gosaibi and Saad groups," the bank said.
The bank is owed $25 million in a syndicated loan to a Saad Group subsidiary and $30 million in two term loans to Algosaibi and one of its subsidiaries, according to a document circulating among bankers in the UAE. FGB in June said its exposures were "not material". While second-quarter profits declined, the bank said first-half profits grew by 3 per cent compared to the same period last year, to Dh1.52 billion. It also said deposits increased by 13 per cent in the first half of the year. Loans increased by 8 per cent during the period.