National Bank of Fujairah, a UAE lender specialising in trade finance, said its first quarter profit jumped almost 30 per cent, boosted by an increase in fee-based services such as foreign exchange.
Net income for the first three months rose to Dh149 million from Dh115m in the same period last year, the bank said. Foreign exchange and derivatives income advanced 42 per cent from the corresponding period last year, while net fees and commissions gained 35 per cent, the bank said without giving the value of the proceeds.
“The bank’s positive start to 2015 continues to reaffirm the efficacy of our long-term strategies and our solid financial position,” said Easa Al Gurg, the bank’s deputy chairman. “That we were able to maintain good growth in net and operating profits just goes to show that there are still good opportunities in the market.”
UAE banks are increasingly branching out into other services apart from their bread and butter business of lending as interest rates remain at record lows and headwinds from lower oil prices force them to be more competitive. The UAE relies heavily on revenues from oil to fund its budget and most economists have downgraded GDP forecasts this year, making easy growth for banks a thing of the past.
As part of its push to diversify, NBF said this month that it would step in and meet the funding needs of diamond manufacturers and traders after the Antwerp Diamond Bank (ADB), once a leader in its field, closed its global operations last year.
NBF said it had brought on board industry experts from ADB, which had a Dubai office, to run its new division and will focus mostly on providing short-term purchase and sales financing to established diamond businesses that ship raw diamonds from producing countries in Africa and Europe to manufacturers in India and the Far East.
Elsewhere, Sharjah Islamic Bank said its first quarter profit slipped to Dh107m from Dh110m, while RAKBank, the Ras Al Khaimah-based lender that specialises in financing small and medium-sized enterprises, said its net profit gained 8.3 per cent to Dh362.2m from Dh334.6m. That was boosted by net interest income, which advanced 14.8 per cent to Dh733.5m from Dh639.2m. Gross loans and advances increased 15.8 per cent to Dh26.7 billion at the end of March this year from Dh23bn a year earlier.
“Our first quarter financial results reflect stable earnings, healthy liquidity and a strong capital base,” said Peter England, the bank’s chief executive. “The key contributing factor is growth in gross loans and advances.”
RAKBank gets most of its income from individual customers and small businesses where the risks of default are higher, but the rewards can be more lucrative. Corporate customers tend to be more reliable and therefore get better rates.
Amid the decline in oil, banks that focus on retail and SME clients are expected to weather any slower economic growth better than lenders that rely on big government companies to fuel deposit growth, analysts say.
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