Banks post strong results as provisions shrink

Tuesday, Oct 27, 2015

Dubai: Amid challenging macroeconomic environment across the region, three leading UAE banks reported strong 9-month results on Tuesday.

Emirates NBD (ENBD) reported a nine-month net profit of Dh5 billion, up 27 per cent, as Emirates Islamic announced a net profit of Dh534, an increase of 109 per cent, and FGB reported a group net profit of Dh4.29 billion for the first nine months of 2015, a 4 per cent increase compared to the same period last year.

Strong operating performance helped by improved interest and financing incomes and a continued decline in impairment charges helped all three lenders to report higher profits.

“Our prudent balance sheet and strong ability to attract and retain both retail and corporate deposits has helped offer protection against increased challenges that the region has experienced,” said ENBD Group Chief Executive Officer, Shayne Nelson.

For the third quarter ended September 30, 2015, ENBD reported a net profit of Dh1.67 billion, up 7 per cent year on year and up 2 per cent compared to the second quarter. For FGB, third quarter net profit growth was flat at Dh1.42 billion compared to Dh1.43 billion in the third quarter of 2014.

“FBG reported flat bottom-line in the third quarter of 2015, as fall in operating income was offset by lower provisions. Despite stable loan growth, the bank’s net interest income declined marginally due to lower net interest margins,” said Naveed Ahmed, Senior Manager, Research Group Global Investment House.

Despite challenging operating environment ENBD’s loan book grew by 6 per cent during the first nine months of 2015. While FGB’s 9-month loans and advances increased 16 per cent year on year to Dh154.1 billion, Emirates Islamic’s financing book receivables grew by 24 per cent to Dh32 billion from Dh26 billion as at year-end 2014.

All banks say their balance sheets are strong with improved credit quality, robust capital ratios and strong liquidity in a challenging quarter for regional liquidity in the banking sector.

By Babu Das Augustine Banking Editor