Abu Dhabi Commercial Bank (ADCB) said on Saturday it had Dh6.6 billion ($1.8 billion) worth of exposure to indebted state conglomerate Dubai World and posted a second-quarter loss.

The lender reported a net loss of Dh531 million in the second quarter compared to a net profit of Dh295 million in the same period a year ago, missing analyst forecasts.

'The enforcement of provisions and impairments, especially those connected with ADCB's exposure to Dubai World, resulted in reporting a net loss,' the bank's chairman, Eissa al-Suwaidi, said in a statement.

Analysts polled by Reuters had estimated an average second-quarter net profit of 163 million dirhams for ADCB, a 45 per cent decline from the same period last year.

The bank has an exposure of Dh6.6 billion to Dubai World which is subject to the restructuring proposal that is currently being finalised, it said in the statement.

ADCB is one of two UAE banks on an informal seven-member coordinating committee negotiating Dubai World's restructuring plan.

Net impairment allowances stood at Dh1.98 billion at the end of June 2010, the bank said. Its non-performing loans ratio was 5.4 per cent, while the provision coverage ratio stood at 76.7 per cent, excluding exposure to Dubai World.

In June, the bank sought to boost its deposits base by acquiring the UAE retail arm of British lender Royal Bank of Scotland (RBS) for $100 million. The deal will give the bank 15 percent market share in the UAE credit card market, the CEO said at the time.

ADCB said loans grew 2.5 per cent to Dh123.9 billion in the first half of 2010 compared to a year ago, while deposits reached Dh96.83 billion, up 12.2 per cent.

Operating income stood at Dh2.48 billion during the first half versus Dh2.32 billion a year ago, the statement said.

In the first quarter of 2010, the bank posted a 36-per cent decline in net profit to Dh225 million, but in 2009, record provisions dragged ADCB to a much wider fourth quarter loss than expected, highlighting the scale of the debt crisis among the regional companies to which it is exposed. – Reuters