ADIB net profit jumps 22.5pc, cites higher revenue
Abu Dhabi, July 20, 2014
Abu Dhabi Islamic Bank (ADIB), the largest sharia-compliant lender in the emirate, beat analysts' estimates on Sunday as it posted a 22.5 per cent jump in second-quarter net profit as core business income boosted revenues.
The lender, which in May got regulatory approval to purchase much of Barclays' retail operations in the UAE, made a net profit of Dh454.8 million ($123.8 million) in the three months to June 30 compared to Dh371.4 million in the same period of 2013, a statement said.
Three analysts polled by Reuters earlier this month forecast an average net profit of Dh406 million.
ADIB cited a 13.9 per cent increase in net revenue, which climbed to Dh1.08 billion, for the increase in profit.
"As was the case in the first quarter of the year, it is noteworthy that the record quarterly performance reflects the sustainable strength of our core banking businesses," chief executive Tirad al-Mahmoud said in the statement, adding it wasn't just relying on lower provisioning for higher profits.
Improving asset quality has been a key driver of UAE banks' profit growth in recent quarters as the country recovers from a sovereign-related debt crisis and the bursting of a local real estate at the end of the last decade.
Fellow Abu Dhabi lender Union National Bank posted a 5.6 per cent increase in second-quarter net profit earlier on Sunday on lower impairments.
Mahmoud added legacy issues from the previous crisis were still impacting the UAE banking system, while the impending start-up of the country's credit bureau - allowing banks for the first time to check a customer's borrowings from all UAE lenders - would bring 'welcomed clarity' to individuals' risk profiles.
ADIB is one of the banks on the creditor committee for Amlak Finance, which said earlier this month it had made a new offer to strike a deal on debt worth $2.7 billion and solve the last major hangover from the property crash.
ADIB booked Dh175.8 million of provisions in the second quarter, down 2.2 per cent year-on-year.
Loans extended by the bank stood at Dh64.9 billion at June 30, up 15.4 per cent year-on-year, while deposits grew 18.2 per cent over the same timeframe to Dh79 billion.
ADIB expects to complete the takeover of Barclays' retail business in the UAE by the year-end, Mahmoud said. It is anticipated the purchase will add over 115,000 new customers to ADIB's client base, taking it to 750,000 customers. - Reuters