Abu Dhabi Commercial Bank's first quarter profits were received positively by analysts.
Five-star report after ADCB posts results
Abu Dhabi Commercial Bank (ADCB) received a glowing report from an analyst after it reported strong first-quarter results.
"ADCB's results came as a positive surprise, reporting profits that were noticeably higher than our expectations," said Naveed Ahmed, the senior financial analyst at Global Investment House in Kuwait.
Calling the results "excellent", Mr Ahmed said earnings were driven by an improvement in revenue streams across the board.
Yesterday, the UAE's third-biggest bank said net profits for the quarter rose 158 per cent compared with the same period last year to Dh583 million, as provisions for bad debts fell by 41 per cent to Dh399m.
Provisions, which "drastically" dropped at the start of year, were the lowest in eight quarters, said Mr Ahmed, who has a "buy" recommendation on the stock with a target price of Dh2.13.
The ratio of non-performing loans improved to 4.9 from 5.8 per cent. This was possibly down to "massive write-offs", he said.
Deposits increased by 21 per cent to Dh109 billion during the year, while gross loans grew by 3 per cent to Dh126bn.
The first-quarter results "reflect the improving economy of the UAE and the strength of our core operations", said Eissa al Suwaidi, the chairman of ADCB.
UAE banks are recovering after the global financial crisis slowed lending, hurt investment banking and led to a rise in bad loans.
ADCB was one of the biggest lenders to the state-owned Dubai World, which last month reached an agreement to restructure US$24.9bn of loans.
Mr Ahmed added the movement in loans was still "disappointing and will need to be revived".
A regulation from the Central Bank capping fees could also hit the bank's net fees and commissions in the months ahead.
Shares in the lender yesterday closed 0.4 per cent lower to Dh2.69, but they have gained more than 32 per cent in value since the end of January.