Bank's books to be untouched by events at Dubai World
ADIB's quarterly result shows blue skies ahead
Abu Dhabi Islamic Bank's (ADIB) second-quarter results are the strongest sign yet that the worst is over for the UAE's second-biggest Islamic lender. The bank yesterday posted a net profit of Dh301.6 million in the three months to June 30, up 56 per cent from Dh193.1m in last year's second quarter. It follows the lender reporting a 9.3 per cent increase in profit in the first quarter.
The results beat the expectations of analysts at EFG-Hermes, who had forecast second-quarter profit of Dh251m. Although Tirad Mahmoud, the chief executive of ADIB, said the bank might continue to take further credit provisions and impairments if required, provisions fell 21 per cent to Dh134.6m from the same period last year. Fortunately for the lender, it will not be affected by the multibillion-dirham debt restructuring that Dubai World is engaged in with local and international creditors.
ADIB is not believed to have any exposure to the government-controlled company's financial restructuring, which is expected to hit the balance sheets of many lenders. "ADIB has improved since new management have taken over," said Janany Vamadeva, a banking analyst at Al Futtaim HC Securities in Dubai. "Based in Abu Dhabi, they also have access to infrastructure projects and are targeting high net worth individuals, which are less of a credit risk."
ADIB's total credit provisions in the second quarter fell from Dh171.4m in the same period a year ago, the bank said. Total provisions stood at Dh1.93 billion at the end of the quarter. "It's broadly in line with our expectations," said Ms Vamadeva. "The provisions were higher than the first quarter but traditionally that has been the lowest provisioning of the year." firstname.lastname@example.org