x Abu Dhabi, UAETuesday 23 January 2018

UAE's big banks give financial sector something to cheer

A number of the UAE's banks see higher profits as lenders recover from the tumult of early 2010, with deposits increasing across the sector.

The banking sector was given a boost yesterday with some of the UAE's largest lenders reporting rising profits as deposits grew.

Emirates NBD, Abu Dhabi Commercial Bank (ADCB) and Abu Dhabi Islamic Bank all posted higher first-quarter profits compared with the same period last year. Each also recorded strong growth in deposits.

The banks' position has improved vastly on the first quarter of last year when the UAE's economy was affected by issues surrounding Dubai World, analysts said.

"Liquidity levels have definitely improved," said Murad Ansari, a financial analyst at EFG-Hermes. "Most banks now have loans-to-deposit ratios of close to 100 per cent."

Emirates NBD, the UAE's biggest bank by total assets, reported a rise in net profits of 27.1 per cent to Dh1.41 billion (US$383.8 million), but a sharp decrease in the bank's operating profit meant the lender missed analysts' expectations.

Gross lending fell 6 per cent to Dh204.6bn, while deposits increased 11 per cent to Dh212bn on the same period last year.

The bank avoided a net loss as a result of the Dh978m sale of a stake in Network International, an electronic payments platform, and mark-to-market gains of Dh856m on the 51 per cent stake the bank retained.

The results signalled an improving position for the bank, analysts said.

"Adjusted for the substantial one-offs, Emirates NBD's results are slightly below our forecasts," said Jaap Meijer, a financial analyst at Alembic HC Securities.

"All in all, operationally a [slightly] weak quarter, but Emirates NBD is now better provisioned versus year-end 2010, thanks to the gain on Network International."

Meanwhile, ADCB's net profits for the first quarter rose 162 per cent to Dh574m on the same period last year as provisions for bad debts fell by 41 per cent to Dh399m.

Net fees and commission income also rose, by 25.2 per cent to Dh262m from a year ago, although these will be affected by the Central Bank's new regulations to cap fees on personal loans.

The bank's deposits increased by 21 per cent to Dh109bn during the year, while gross loans grew by 3 per cent to Dh126bn.

Abu Dhabi Islamic Bank, the emirate's biggest Islamic lender, posted profits of Dh303.2m, an increase of 3.3 per cent compared with the same quarter last year.

The bank also reported a 3.9 per cent increase in deposits to Dh51.9bn and a 15.4 per cent increasing in gross customer financing to Dh50.5bn, compared with last year.

But Emirates NBD continued to feel the weight of bad debts.

Operating profits fell 92.6 per cent to Dh83mas net impairments on financial assets swelled 146.9 per cent to Dh1.36bn.

The bank also posted impairments and share of loss on associates worth Dh477.2m, the bulk of which came from the developer Union Properties.