NBAD and DIB second-quarter profits edge up

Abu Dhabi’s biggest bank said second-quarter profits nudged ahead as the Central Bank reported demand for loans is slowing in the aftermath of the biggest drop in oil since 2008.

National Bank of Abu Dhabi said second-quarter profit rose 1.3 per cent to Dh1.45 billion compared to Dh1.43bn a year earlier. While the bank said loan growth was 19.9 per cent at the end of the second quarter, revenue from its key corporate division fell 6.3 per cent amid declining returns because of low interest rates. The bank also said deposits fell 3.1 per cent.

“We delivered this growth despite economic and market headwinds including lower oil prices, margin compression and lower non-customer income in our global markets business,” said Alex Thursby, the bank’s chief executive.


The central bank on Wednesday reported that its key gauge of credit demand fell in the second quarter.

The net balance measure for business lending – the weighted percentage of respondents reporting an increase in demand for loans minus those reporting a fall in demand – declined to 5.9 from 13.6 in the first quarter.

The lender of last resort said that respondents of its survey cited the housing market outlook and changes to income as the most important factors in the change in demand for loans.

The number of residential property transactions in Dubai tumbled by more than two- thirds in the first half compared to a year earlier, JLL said on Wednesday.

Abdulaziz Al Ghurair, the chief executive of Dubai-based Mashreq, expressed doubts on Tuesday that overall bank growth in the UAE would record substantial gains this year.

“I think credit growth will be flattish toward the end of this year,” Mr Al Ghurair said. “You have to see who is borrowing. Is it really filtering down to the real economy or are a few large government entities raising that fund?”

Elsewhere, Dubai Islamic Bank, the biggest Sharia-compliant lender in the emirate, said its second-quarter profit jumped 35 per cent as the bank reduced its exposure to bad debt, cut its costs and grew its loan book.

Net income increased to Dh1.8 billion in the second quarter from Dh1.3bn in the same period the previous year, the bank said. Losses from bad loans decreased to Dh276 million from Dh355m a year earlier. The bank’s cost income ratio improved to 34.1 per cent from 34.6 per cent a year earlier. Meanwhile, its financing assets increased 18 per cent to Dh87bn at the end of 2014.

“We expect to penetrate the market further during the year and increase DIB’s share of business across the banking sector in 2015,” said Adnan Chilwan, the bank’s chief executive. “Our growth strategy is supported through an unyielding focus on diversification, and operational improvement.”

The vast majority of UAE banks have been profitable as concerns that the collapse of oil prices would hurt profitability proved unfounded. The country’s economy has proved to be resilient, analysts say, as non-oil GDP continues to flourish. Oil, upon which the economies of the crude-rich Arabian Gulf are heavily dependent, has lost more than half of its value over the past year.

mkassem@thenational.ae

dalsaadi@thenational.ae

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