x Abu Dhabi, UAEWednesday 26 July 2017

UAB profits after opening purse

United Arab Bank sees a modest increase in earnings as it raises lending levels and provisions fall.

United Arab Bank (UAB) won new businesses and increased profits last year as it loosened the purse strings and increased lending levels by almost Dh1 billion (US$272.2 million).

The bank reported an annual 9.7 per cent increase in net profits to Dh308m. UAB's net loans and advances rose by 15.2 per cent to Dh5.49bn, with the largest increase in short and medium-term loans, including retail loans.

Freeing up lending led to an 8.3 per cent increase in net interest income to Dh351.2m, the bank's financial statements show.

Meanwhile, provisions for bad debts were almost halved, falling 44.1 per cent to Dh19.29m. Net operating income also rose 7.9 per cent to 470.9m.

"UAB's robust performance in 2010 highlights the resilience and strength of the bank in the context of the continuing global financial markets restructuring over the last two years, which cements our position and places us comfortably among the top tier of banks' performance in the UAE in relative terms," said Paul Trowbridge, the chief executive of UAB.

"UAB remains well positioned for poised, sustainable and diversified growth in 2011 through the platform we have built in 2010 in the retail banking segment, together with our traditional strength in banking businesses in the corporate banking sector."

Most of the bank's lending constituted personal loans and trade financing arrangements. Lending to the Government and public sector surged 80 per cent to Dh448.6m, while loans to other financial institutions hit Dh757.3m, an increase of 66.7 per cent.

"This bank has been increasing its profitability," said Dr Giyas Gokkent, the chief economist at National Bank of Abu Dhabi. "However, their share of sector assets has been flat at 0.5 per cent, as of September 2010."

But Tarik el Mejjad, an analyst at Nomura, said although UAB provisioning fell along with Abu Dhabi Commercial Bank and National Bank of Fujairah, it was still too early to predict a sector-wide decrease in funds set aside for defaulting loans.

Provisions across the banking sector hit Dh41.2bn in November, an increase of 28.7 per cent on the year before, according to the most recent Central Bank data.