Egypt moves to secure IMF loan with currency flotation

Egypt’s currency yesterday fell by almost a third to 13 pounds from a previously fixed rate of 8.85 pounds against the US dollar following a statement by the central bank saying that it was letting the pound float.

The move to a more flexible exchange rate had been telegraphed in advance over the summer by central bank governor Tarek Amer and will help the Arab world’s most populous nation fulfil one of the key conditions needed to lock in a US$12 billion bailout loan from the IMF.

The struggling nation is betting that the adoption of a more flexible exchange rate, coupled with aid, will boost investment in as it struggles economically.

“The CBE [central bank of Egypt] hereby announces its decision to move, with immediate effect, to a liberalised exchange rate regime in order to quell any distortions in the domestic foreign currency market,” the bank said in a statement.

“This move will allow market demand and supply dynamics to work effectively in order to create an environment of reli­able and sustainable provision of foreign currency.”

The central bank also raised its key interest rates by 300 ­basis points and said that it would also stop trying to control what can be imported. The bank said the starting exchange rate would “serve as soft guidance to jump-start the market.” The dollar was selling for as much as 14.25 in some banks in Egypt after the announcement.

The country has yet to fulfil other conditions set by the IMF. As well as moving to a more flexible exchange rate, the IMF has asked Egypt to reduce energy subsidies that weigh heavily on its budget and raise an additional $6bn in financing, mostly from allies in the Arabian Gulf, before it starts disbursing the loan.

“We welcome the central bank of Egypt’s decision to liberalise the foreign exchange system and adopt a flexible exchange rate regime,” said Chris Jarvis, the IMF mission chief for Egypt.

“The flexible exchange rate regime, where the exchange rate is determined by market forces, will improve Egypt’s external competitiveness, support exports and tourism and attract foreign investment. All of this will help foster growth, job creation and stronger external position for the country.”

Egypt’s economy grew by 4.2 per cent last year according to the IMF, a rate that is expected to slow to 3.8 per cent this year and 4 per cent next year.

Investors also cheered the news as Egyptian shares rallied by as much as 8.3 per cent.

“Lessons learnt from the previous float experience in 2003 proved that a float scenario with no restrictions and confidence- building measures reaped better results for the economy, debt and equity markets,” said Reham ElDesoki, an economist at investment bank Arqaam Capital, based in Dubai.

This is not the first time Egypt has moved to a more flexible exchange rate. In January 2003, the country devalued the currency by 14 per cent – a move that killed a black market trade in US dollars and attracted billions of dollars in international investment before the financial crash of 2008.

Egypt relies heavily on inflows of hard currency and has been suffering for years from decreasing receipts from key sources including foreign direct investment, the Suez Canal, remittances from Egyptians abroad and tourism – especially since the downing of a Russian jet that exploded in October last year over Sinai.

Egypt has resisted letting its currency freely float and has instead made piecemeal devaluations since the uprising that removed the former president Hosni Mubarak in February 2011. The cost of defending the Egyptian pound has been high, however.

Despite the billions of US dollars pumped into Egypt by its oil-rich allies in the Gulf, including the UAE, the country’s foreign reserves were reduced by more than half to about $16bn at one point since 2011, but have since partially recovered amid stringent controls on imports. Since 2011, Gulf nations have pumped more than $20bn into Egyptian coffers.

Still, investors say Egypt will need to do more than just fix monetary policy to become an attractive destination, and fiscal measures such as reducing energy and food subsidies also need to be implemented. “We view the EGP devaluation as a positive catalyst for the credit and equity investment case of Egypt,” said Mohamed Jamal, managing director of capital markets at Abu Dhabi investment company Waha Capital, who oversees more than $300 million in mostly Middle East and North African stocks and bonds.

“Nevertheless, this devaluation is not an end in itself, but a monetary tool that has to be considered in the context of a comprehensive reforms package, including fiscal policy adjustments, monetary policy and other structural reforms.”

The Egyptian central bank devalued the Egyptian pound by 13 per cent in March, but that failed to kill the trade of the US dollar in the black market, which in recent weeks has fetched as much as 18 pounds. Meanwhile, a key measure of non-oil private sector business activity sponsored by the Dubai-based bank Emirates NBD fell to a 39-month low last month, weighed down by the difficulty companies have had sourcing dollars, the bank said yesterday. The purchasing mangers’ index fell to 42 last month from 46.3 in September, it said.

A reading above 50 indicates that the non-oil economy is growing, while a reading below 50 suggests that it is contracting.

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Egypt moves to secure IMF loan with currency flotation

Egypt’s currency yesterday fell by almost a third to 13 pounds from a previously fixed rate of 8.85 pounds against the US dollar following a statement by the central bank saying that it was letting the pound float.

The move to a more flexible exchange rate had been telegraphed in advance over the summer by central bank governor Tarek Amer and will help the Arab world’s most populous nation fulfil one of the key conditions needed to lock in a US$12 billion bailout loan from the IMF.

The struggling nation is betting that the adoption of a more flexible exchange rate, coupled with aid, will boost investment in as it struggles economically.

“The CBE [central bank of Egypt] hereby announces its decision to move, with immediate effect, to a liberalised exchange rate regime in order to quell any distortions in the domestic foreign currency market,” the bank said in a statement.

“This move will allow market demand and supply dynamics to work effectively in order to create an environment of reli­able and sustainable provision of foreign currency.”

The central bank also raised its key interest rates by 300 ­basis points and said that it would also stop trying to control what can be imported. The bank said the starting exchange rate would “serve as soft guidance to jump-start the market.” The dollar was selling for as much as 14.25 in some banks in Egypt after the announcement.

The country has yet to fulfil other conditions set by the IMF. As well as moving to a more flexible exchange rate, the IMF has asked Egypt to reduce energy subsidies that weigh heavily on its budget and raise an additional $6bn in financing, mostly from allies in the Arabian Gulf, before it starts disbursing the loan.

“We welcome the central bank of Egypt’s decision to liberalise the foreign exchange system and adopt a flexible exchange rate regime,” said Chris Jarvis, the IMF mission chief for Egypt.

“The flexible exchange rate regime, where the exchange rate is determined by market forces, will improve Egypt’s external competitiveness, support exports and tourism and attract foreign investment. All of this will help foster growth, job creation and stronger external position for the country.”

Egypt’s economy grew by 4.2 per cent last year according to the IMF, a rate that is expected to slow to 3.8 per cent this year and 4 per cent next year.

Investors also cheered the news as Egyptian shares rallied by as much as 8.3 per cent.

“Lessons learnt from the previous float experience in 2003 proved that a float scenario with no restrictions and confidence- building measures reaped better results for the economy, debt and equity markets,” said Reham ElDesoki, an economist at investment bank Arqaam Capital, based in Dubai.

This is not the first time Egypt has moved to a more flexible exchange rate. In January 2003, the country devalued the currency by 14 per cent – a move that killed a black market trade in US dollars and attracted billions of dollars in international investment before the financial crash of 2008.

Egypt relies heavily on inflows of hard currency and has been suffering for years from decreasing receipts from key sources including foreign direct investment, the Suez Canal, remittances from Egyptians abroad and tourism – especially since the downing of a Russian jet that exploded in October last year over Sinai.

Egypt has resisted letting its currency freely float and has instead made piecemeal devaluations since the uprising that removed the former president Hosni Mubarak in February 2011. The cost of defending the Egyptian pound has been high, however.

Despite the billions of US dollars pumped into Egypt by its oil-rich allies in the Gulf, including the UAE, the country’s foreign reserves were reduced by more than half to about $16bn at one point since 2011, but have since partially recovered amid stringent controls on imports. Since 2011, Gulf nations have pumped more than $20bn into Egyptian coffers.

Still, investors say Egypt will need to do more than just fix monetary policy to become an attractive destination, and fiscal measures such as reducing energy and food subsidies also need to be implemented. “We view the EGP devaluation as a positive catalyst for the credit and equity investment case of Egypt,” said Mohamed Jamal, managing director of capital markets at Abu Dhabi investment company Waha Capital, who oversees more than $300 million in mostly Middle East and North African stocks and bonds.

“Nevertheless, this devaluation is not an end in itself, but a monetary tool that has to be considered in the context of a comprehensive reforms package, including fiscal policy adjustments, monetary policy and other structural reforms.”

The Egyptian central bank devalued the Egyptian pound by 13 per cent in March, but that failed to kill the trade of the US dollar in the black market, which in recent weeks has fetched as much as 18 pounds. Meanwhile, a key measure of non-oil private sector business activity sponsored by the Dubai-based bank Emirates NBD fell to a 39-month low last month, weighed down by the difficulty companies have had sourcing dollars, the bank said yesterday. The purchasing mangers’ index fell to 42 last month from 46.3 in September, it said.

A reading above 50 indicates that the non-oil economy is growing, while a reading below 50 suggests that it is contracting.

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Suez Canal offers shippers discounts for advance fees paid upfront

Egypt is offering shippers using the Suez Canal discounted fees as the government scrambles to raise US$6 billion it needs to unlock an IMF loan twice the size.

Cairo is negotiating a $12bn bailout package, but that is dependent on Egypt devaluing its currency and reducing subsidies as well as coming up with an additional $6bn, mostly from allies.

“If you pay three years in advance, you will take a 3 per cent discount, if you pay five years in advance, you’ll get a 5 per cent discount,” Mohab Mameesh, the chairman and managing director of the Suez Canal Authority, said on the sidelines of the Dubai Maritime Summit yesterday. “Because we need the hard currency in advance. It will push the economy.” The authority collects it fees in US dollars.

Mr Mameesh said that he was still waiting to hear from shippers including Maersk, CMA CGM, Mediterranean Shipping Company and Hapag-Lloyd on the matter.

At the same time, the former commander of the Egyptian navy said that he expected an increase in revenues from the canal as oil prices rise. Low oil prices make it cheaper for shippers to go around the Cape of Africa and avoid paying the Suez Canal toll, while it works in reverse when oil prices are high.

The Arab world’s most populous nation is in the midst of a currency crisis that has been escalating since a popular uprising in 2011 triggered political and economic chaos.

Its economy is highly dependent on hard currency the government gets from the Suez Canal as well as tourism and remittances from abroad.

All these sources have been choked in recent years as global trade slows, low oil prices reduce the amount Egyptians working in the Arabian Gulf can send home and tourists shun the country in the aftermath of the downing of a Russian passenger airline over the Sinai last year that killed all aboard.

Efforts to boost dollar intake, including extending the size of the canal in an US$8 billion project to allow more ships to enter, has not resulted in more revenues and the country’s finances in recent years have been propped up by aid from Arabian Gulf nations.

In August last year, the first phase of the canal was inaugurated, but revenues dropped 5.3 per cent to $5.175 billion in 2015 as global trade slowed and more ships used the longer route around Africa. Mr Mam­eesh said the authority was targeting annual revenues of $13bn by 2023.

Egypt’s government relies heavily on those inflows of hard currency to import energy and food that it sells at subsidised rates. Businesses are also in need of foreign currency to import raw materials and machinery.

The value of the Egyptian pound has been tightly controlled by the central bank over the past five years as the government intensifies efforts to curtail imports while using its foreign currency reserves to defend the Egyptian pound.

As a result of these measures, hard currency has become even harder to find, pushing up the value of the US dollar on the black market.

The Egyptian central bank devalued the pound by 13 per cent in March, but that failed to kill the trade of the black market.

The dollar currently trades at almost double the official rate of 8.85 Egyptian pounds on the black market.

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Dubai Airports hires HSBC to advise on airports expansion

Dubai has hired HSBC to advise it on borrowing US$3 billion to finance the expansion of its two international airports as passenger numbers surge.

The emirate is aiming to boost annual passenger flow at Dubai International Airport and Al Maktoum International Airport to 146 million by 2025.

HSBC will be advising the Department of Finance for the Government of Dubai, the Investment Corporation of Dubai and Dubai Aviation City Corporation on raising the money through a number of sources that will include Islamic financing, the Department of Finance said in a statement.

The expansion of airports in Dubai and Abu Dhabi and heavy investment in the ­hotel sector are part of a broader push to diversify the UAE’s economy and make it less reliant on oil revenues.

An HSBC spokesperson declined to elaborate further, but bankers who did not want to be named said that the fin­ancing would be likely to include a big chunk of export credit agency loans – a form of intra-government lending that can be cheaper than commercial loans but that is often dependent on the borrower buying goods from that country.

“Dubai remains firmly committed to the development of the Al Maktoum International Airport and to the growth of the global aviation sector, and this initial $3bn transaction to support Dubai’s ambitious 2025 passenger capacity targets is testament to our belief,” said Sheikh Ahmed bin Saeed Al Maktoum, the chairman of Dubai’s Supreme Fiscal Committee.

Dubai International Airport, is the world’s largest. In 2015, it hosted 78 million passengers, representing a 13 per cent average compound growth rate since 2000. Last year, it overtook London’s Heathrow as the world’s busiest airport.

The UAE economy has been given a push in the past couple of years by government spending on infrastructure that has included not only airports but other civil projects such as roads, hospitals and museums.

While the collapse in oil prices in the summer of 2014 has hit some projects as governments cut back on funding, many of those governments are borrowing money to ensure that key projects keep moving ahead.

“In line with Dubai’s vision to maintain its status as one of the world’s most important cultural and commercial centres, the planned expansion of both of the city’s airports is critically important, and our department is proud to play a vital role in their ongoing financing, just as we have with other similarly major projects,” said Abdulrahman Saleh Al Saleh, director general of the Department of Finance for the Government of Dubai.

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Profits at UAE lenders to fall amid slowdown, but worst is now behind for banking sector

UAE banking sector profits may fall between 10 and 20 per cent this year versus 2015 as a slowing economy takes its toll on loan growth, an escalation in levels of bad debt and a rise in expenses amid a spate of new regulations that are forcing lenders to keep more cash at hand, according to Abdul Aziz Al Ghurair.

But on the flip side, the worst is behind the sector in terms of money needed to be set aside for loans gone sour and next year banks will probably report flat profit growth, said Mr Al Ghurair, who is head of the UAE Banks Federation and also the chief executive of Mashreq.

“The economy has slowed down, there is slowdown in tourism, slowdown in trade among our trade partners. Last year we worked with it but it has shown the impact,” Mr Al Ghurair said.

“It’s also been reflected on the banking industry and it has slowed down and this year you’ve seen anything between 10 per cent to 20 per cent, depending on the bank. Next year, I think it will be similar to this year, plus or minus 5 per cent.”

Those effects can already be seen in the latest quarterly results of banks where provisions have been rising, putting a damper on profits. UAE banks have not been having the best of times since the price of oil began its long descent during the summer of 2014. Deposits have dwindled as government-related entities withdrew funds to help fill a growing budget deficit. Among the hardest hit have been small and medium-sized businesses. The executive said, however, that the industry would face other challenges in the coming years including increased costs for having to keep higher reserves and a fixed percentage of provisions for all debt – costs he said that would most likely be passed on to customers.

In a wide-ranging media conference in Dubai that lasted an hour-and-a-half, Mr Al Ghurair said that a previously announced Dh7 billion bailout initiative for businesses facing bankruptcy, included Dh4.5bn of debt held by small and medium-sized enterprises. That latter figure had not been previously disclosed. Mr Al Ghurair said, however, that the pace of bad debt among small businesses had slowed, echoing a number of other senior executives who are reporting the same trend.

The head of commercial banking at National Bank of Abu Dhabi said last week at an SME forum in Dubai that the fallout from the SME debt crisis has abated, but many owners are still facing difficulties repaying lenders following the crash in commodity prices.

Continuing on the subject of small businesses, Mr Al Ghurair said that the recently passed bankruptcy law – expected to boost entrepreneurial animal spirits – will prob­ably take effect some time early next year with court-appointed committees set to restructure businesses gone awry.

The lack of insolvency regulations during Dubai’s credit crisis between 2009 and 2010 led to a number of businessmen being detained for unpaid debts, with many fleeing the country to avoid arrest. That scenario has been replaying itself on a much smaller scale over the past two years as SMEs face diffi­culty in repaying debt amid the collapse of oil prices and the subsequent fall in government spending. The bankruptcy law will reduce the risk of criminal prosecution for defaulting on debt and promote the restructuring of loans instead.

“The bankruptcy law is a great thing and the banks federation has been pushing for this, to get it fast-tracked,” Mr Al Ghurair said. “Hopefully it will be implemented in the first quarter of next year.”

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SME profile: Mumpreneur encourages children's interest in the arts with Bulb centre

Elhame Bourani says seeing her kids glued in front of screens for too long inspired her to open an arts centre where children can unleash their creative talents through drawing and dance.

Mrs Bourani, a public relations executive who has called the UAE home for the past 14 years along with her husband and three children, says she has always had a desire to start her own business and work with kids. Furthermore, she says that when deciding what kind of business to try her hand at she concluded that the nation’s capital has enough sporting activities and not enough arts on offer. So came the idea for the The Bulb Fine Arts Center.

“I wanted to do something for me that I would enjoy and find further motivation beyond my day job and something that would add to the community,” she says.

“Something where children can evolve and not just through sports because there’s a lot of sports available across Abu Dhabi, but there’s not many places that focus on their creativity. With all the gadgets, PlayStations, mobiles, you feel that children, and I look at my children, have all become photocopies of each other.”

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In Abu Dhabi, the weather means children spend more time indoors and conscious of this perhaps, cultivating the arts has been a cornerstone of its long-term vision for its development. As well as building a branch of the Louvre in the capital, there are a host of cultural festivals from music to film.

Mrs Bourani says she did her market research by designing a questionnaire on Survey Monkey, a free online survey software, sending it to all her contacts and asking them to share it. Encouraged by the results, she moved ahead with finding a location in Khalifa City which she took occupancy of in March after a two-year bureaucratic delay in handing over the property to tenants.

Getting the business up and running wasn’t a stroll in the park either, the French-Syrian national notes. The steps for starting your own business in the UAE – especially if it’s your first entrepreneurial effort – are not always clear and one can end up retracing steps easily. For instance, the agency responsible for facilitating the application to the labour department told her that she could apply for as many employees as she liked but when the authorities came to inspect her 70 square metres premises she was told that she’d applied for too many employees than her place had room for.

“When you’re an early business and you have no experience setting up a business, it’s a bit overwhelming,” she says.

The costs for setting up the business exceeded what the entrepreneur had expected it would be. Mrs Bourani estimates that she spent Dh250,000 – and that’s without factoring in rent and operational spending. But it does include things such as Dh8,000 for the trade licence, about Dh9,000 per employee to cover things such as the cost of the visa and about Dh100,000 for finishing the inside of the centre.

The Bulb started classes last month including lessons in drawing, sketching, watercolours and clay, but has since expanded to storytelling, yoga and life coaching, among other activities. The centre also has workshops for adults as well as children with special needs – the latter being a first for Abu Dhabi, the founder says. Activities can be taken on an individual walk-in basis or as part of a course that can run from four to 10 weeks. A fine arts activity costs between Dh75 to Dh100, while a four-week art course that runs once a week for an hour-and-a-half starts from Dh600.

Even though she has been in business for only a couple of weeks, Mrs Bourani has bigger ambitions for her nascent project and envisages a centre that will branch out into science activities as well as arts and crafts.

“It’s too early but it’s not too early in my head,” she says. “My vision is to go to from a small centre to a place that’s bigger than this where we can have science labs and computers. It’s not going to happen now, maybe in two or three years.”

The business, which has been completely self-financed, hasn’t broken even yet, but Mrs Bourani says she has been encouraged by the level of interest thus far. On the first day of opening, some 42 children showed up.

“The vibe we are getting from the community is amazing,” she says. “We don’t have a lot of subscriptions but we’re very optimistic. We’ve only been open for three weeks.”

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SME debt crisis fallout shows signs of abating

A top National Bank of Abu Dhabi (NBAD) executive has said the fallout from the SME debt crisis has abated but many owners are still facing difficulties repaying lenders following the crash in commodity prices.

“We cannot say that the problem is behind us yet,” Nilanjan Ray, head of commercial banking at the National Bank of Abu Dhabi, said in Dubai yesterday.

“What we can say is that we are not seeing further rapid deterioration.”

The banker’s comments come as the local bank earnings season comes to an end and many balance sheets are showing more holes from debt gone sour.

While NBAD does not break out revenues from SMEs, the bank this week said that money set aside to cover bad debt grew 68 per cent in the third quarter from the same period last year. That has not stopped NBAD from lending to small businesses, Mr Ray said, but risky forms of lending such as unsecured loans have been stopped and like all banks NBAD has become more circumspect about who it lends to.

He noted that over the past three years NBAD’s lending to SMEs has jumped 300 per cent despite the woes facing the segment. Like many other bankers, Mr Ray hailed the recently approved bankruptcy law saying it will foster confidence among businessmen. He pointed out, however, that a number of technical issues surrounding the law will mean that another couple of years are needed for it to see its full effects.

“That is a really important step that will help the SME segment, but a couple of more developments in terms of asset registry and some other issue in terms of recovery of assets, the ability to register a particular asset across jurisdictions in the country would all help,” he said. “For the full benefit to appear it may take a couple of years.”

The lack of insolvency regulations during Dubai’s credit crisis between 2009 and 2010 led to a number of businessmen being detained for unpaid debts, with many fleeing the country to avoid arrest. That scenario has been replaying itself on a much smaller scale over the past two years as SMEs face diffi­culty in repaying debt amid the collapse of oil prices and the subsequent fall in government spending. The bankruptcy law will decriminalise defaulting on debt and promote restructuring of loans.

Abdul Aziz Al Ghurair, the chief executive of Mashreq and the head of the UAE Banks Federation, said in November that some small business owners had skipped town, leaving about Dh5 billion of unsettled loans.

Separately, NBAD said that it’s seeking a US$2bn syndicated loan that it expects to complete before the end of the year and which will be used in part to refinance existing loans.

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Quarterly profit rises 31% at FGB

FGB said on Wedesday its third-quarter profit jumped 31 per cent, boosted by higher revenues.

The bank’s profit rose to Dh1.86 billion in the three months ended September from Dh1.41bn in the same period last year. Net interest income and Islamic financing increased 1 per cent to Dh1.59bn versus Dh1.57bn in the same period last year. Other operating income leapt 324 per cent to Dh708 million from Dh167m, but the bank did not specify what was behind that gain.

“We are pleased with our third quarter performance as it highlights once again the resilience of our business model and our ability to generate solid earnings in a volatile global environment,” said André Sayegh, FGB’s chief executive.

FGB shares were down 14.3 per cent for the year to date through Wednesday, versus a decline of 0.9 per cent for the Abu Dhabi Securities Market General Index. FGB accounts for 23.9 per cent of the index’s weighting, behind only Etisalat’s 29.6 per cent.

This week, FGB and its closest competitor NBAD invited shareholders to separate general assembly meetings on December 7 to approve the two banks’ merger.

The banks said in July that their boards had unanimously voted to recommend to their shareholders a merger of the Abu Dhabi-listed banks, in what would create a lender with US$175bn in assets, the largest in the Middle East.

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NBAD third-quarter earnings flat amid loans slowdown

National Bank of Abu Dhabi (NBAD), the emirate’s biggest lender by assets, said on Wednesday that its third-quarter profit was flat, as a gain in fees and commissions was outweighed by a drop in income from loans.

The bank’s profit fell by 0.5 per cent to Dh1.32 billion in the three months ending September, from Dh1.326bn in the same period a year ago.

Net interest income decreased by 1.4 per cent to Dh1.8bn compared with Dh1.83bn in the corresponding period last year, while non-interest income rose by 14.9 per cent to Dh877 million from Dh763m. Meanwhile, customer loans fell by 3.2 per cent to Dh205.3bn at the end of September, compared with Dh212.1bn for the same period last year, amid an industry-wide slowdown in loan growth.

Revenues were up 3.4 per cent to Dh2.68bn from Dh2.59bn a year ago.

“We achieved this performance during a period of seasonal slowdown and ongoing challenging market conditions, while we continued to maintain expense discipline along with strong capital and liquidity positions,” said Abhijit Choudhury, the bank’s acting chief executive.

“Looking ahead to the rest of the year, we are aiming to continue to deliver solid underlying net profit growth while maintaining our conservative risk profile.”

NBAD and FGB, its biggest competitor in Abu Dhabi, this week invited shareholders to separate general assembly meetings on December 7 to approve their merger.

In July, the banks said their boards had unanimously voted to recommend to their shareholders a merger of the two Abu Dhabi-listed banks, in what would create a lender with US$175bn in assets, the largest in the Middle East.

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NBAD third-quarter earnings flat amid loans slowdown

National Bank of Abu Dhabi (NBAD), the emirate’s biggest lender by assets, said on Wednesday that its third-quarter profit was flat, as a gain in fees and commissions was outweighed by a drop in income from loans.

The bank’s profit fell by 0.5 per cent to Dh1.32 billion in the three months ending September, from Dh1.326bn in the same period a year ago.

Net interest income decreased by 1.4 per cent to Dh1.8bn compared with Dh1.83bn in the corresponding period last year, while non-interest income rose by 14.9 per cent to Dh877 million from Dh763m. Meanwhile, customer loans fell by 3.2 per cent to Dh205.3bn at the end of September, compared with Dh212.1bn for the same period last year, amid an industry-wide slowdown in loan growth.

Revenues were up 3.4 per cent to Dh2.68bn from Dh2.59bn a year ago.

“We achieved this performance during a period of seasonal slowdown and ongoing challenging market conditions, while we continued to maintain expense discipline along with strong capital and liquidity positions,” said Abhijit Choudhury, the bank’s acting chief executive.

“Looking ahead to the rest of the year, we are aiming to continue to deliver solid underlying net profit growth while maintaining our conservative risk profile.”

NBAD and FGB, its biggest competitor in Abu Dhabi, this week invited shareholders to separate general assembly meetings on December 7 to approve their merger.

In July, the banks said their boards had unanimously voted to recommend to their shareholders a merger of the two Abu Dhabi-listed banks, in what would create a lender with US$175bn in assets, the largest in the Middle East.

mkassem@thenational.ae

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