x Abu Dhabi, UAETuesday 23 January 2018

UAE banks surge as Q2 earnings on target

Bank rise to lift the Dubai and Abu Dhabi benchmarks as investors buy financial stocks after quarterly results were broadly in line with expectations.

Bank rise to lift the Dubai and Abu Dhabi benchmarks as investors buy financial stocks after quarterly results were broadly in line with expectations. "UAE bank results have been positive, with lenders' capital adequacy ratios increasing, which shows stability is improving," says Wadah al-Taha, a Dubai-based financial analyst. "But the main issue going forward will be whether their bad debts will increase and force banks to take more provisions. Loan to deposit ratios have also increased as deposits fall."

Combined bank deposits declined 1.1 per cent in June from the month before, according to data from the UAE Central Bank, while the gap between loans and deposits increased by 51.6 per cent over the same period. "Profitability should not be the priority for banks ? it's more important to ensure they have enough liquidity, capital adequacy ratios are maintained and the loans to deposit gap does not get any wider," adds Mr Taha.

Emirates NBD and Dubai Islamic Bank climb 2.2 and 3.5 per cent respectively. National Bank of Abu Dhabi rises 2.6 per cent. Abu Dhabi Commercial Bank surges 5.3 per cent after unlisted Gulf Merchant Bank says it had completed a buy back of its shares held by ADCB. These gains help Abu Dhabi's index climb 0.6 per cent to 2,835 points, while Dubai's benchmark rises 2 per cent to 1,856 points. *Reuters