NBAD leads profit parade among UAE banks

Other UAE lenders also reported buoyant earnings as the economy continues to bury the debt woes of 2009 and to flourish.

NBAD’s net income rose to Dh1.42 billion in the second quarter compared to Dh1.21bn in the same period the previous year. Silvia Razgova / The National
Powered by automated translation

National Bank of Abu Dhabi, the biggest publicly traded lender in the UAE, said its second quarter profit increased 17.5 per cent as it works to generate more revenue from fees for services other than loans. That is because the competition for lending has intensified and record low interest rates mean that the margins it gets are compressing.

FGB, formerly known as First Gulf Bank, and Abu Dhabi Commercial Bank, Abu Dhabi's second and third largest lenders respectively, as well as Ras Al Khaimah's RAKBank, also reported buoyant earnings as the economy continues to bury the debt woes of 2009 and flourish.

NBAD’s net income rose to Dh1.42 billion in the second quarter compared to Dh1.21bn in the same period the previous year, the bank said. Revenues in the quarter rose 9.2 per cent to Dh2.58bn compared to the same quarter last year, while loans grew 5 per cent to Dh182bn, the bank said.

The quarterly profit beat the Dh1.29bn mean estimate of five analysts polled by Bloomberg.

“Our results in the second quarter of 2014 provide further evidence that our strategy is working,” said Alex Thursby, the bank’s chief executive. “We are seeing positive underlying trends across our businesses, particularly our fee-generating businesses. I expect these trends to continue in the second half of the year and in the years to come.”

Banks in the UAE have been prime beneficiaries of an economic revival in which the economy grew by more than 5 per cent last year as interest rates reached new lows and credit growth got back into full swing. At the same time, the banks’ competition for retail customers has become especially fierce in a country where more than 50 banks (not all of them catering to individual clients) serve a population of 9 million.

That has led NBAD to focus more on getting profit from other services such asset management, securities brokerage, foreign exchange and trade finance. It is also tapping a US$137 billion market for corporate banking in a so-called West-East emerging market corridor where many companies have cross-border needs. NBAD believes it is well positioned to exploit this, being at the cross roads.

FGB said its second quarter profit gained 16 per cent to Dh1.35bn amid changes last year that split the bank’s activities into the three divisions of wholesale banking, consumer banking and treasury and global markets.The bank this year also rebranded to give it a sleeker look as it expands abroad.

“Our recent rebrand signifies our aspirations and clear plan to position FGB for long-term sustainable success in the UAE and across geographies,” said Andre Sayegh, FGB’s chief executive.

ADCB said its first half profit increased 19 per cent to Dh2.16bn as it pared costs and focused on customers with the least likelihood of defaulting on loans.

“We are pleased with the bank’s financial results for the first half of 2014,” said Ala’a Eraiqat, ADCB’s chief executive. “This was primarily driven by our strategy of ambition and measured discipline, which continues to yield positive results. Our focus on disciplined cost management combined with improved asset quality have contributed to our success in the first half of 2014.”

Also yesterday, RAKBank said its profit in the second quarter was Dh365.8m, an increase of Dh31.3m on the same period last year.

“We are seeing exceptionally strong growth in our SME and commercial lending, which is a major engine for growth to Rakbank,” said Peter England, the bank’s chief executive.

mkassem@thenational.ae

Follow The National's Business section on Twitter