Wednesday 20 June 2018

UNB seen with $354m Dubai World exposure

Dubai, January 24, 2011

UAE lender Union National Bank (UNB) may have up to Dh1.3 billion ($353.9 million) exposure to state-owned conglomerate Dubai World, Nomura said in a research report on Monday.

Abu Dhabi-based UNB may not have booked any specific provisions for its exposure to the troubled entity, the brokerage said, forecasting the lender could need to book provisions of Dh260 million, assuming a 20 per cent impairment.

'Management has yet to announce the bank's exposure to Dubai World. We also believe that UNB has not yet booked any specific provisions related to this entity,' Nomura analyst Tarik El Mejjad said in a research note.

Dubai World, the Gulf emirate's flagship conglomerate, has restructured $25 billion in debt but some banks are yet to fully book provisions for their exposure to the troubled firm.

Nomura slashed its price target on UNB to Dh3.8 a share from Dh4 previously. The brokerage maintained its neutral rating on the stock.

The brokerage said provisions may weigh on the lender's fourth-quarter results.

In the third quarter, UNB beat analysts' forecasts by posting a 28 per cent increase in net profit, helped by a surge in net interest income.

UNB shares closed 0.9 per cent lower to Dh3.2 on the Abu Dhabi bourse Monday. – Reuters

Tags: Dubai World | nomura | UNB | exposure |

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