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|11 October, 2018

UAE banks to see higher quarterly profits

Profits of the biggest lenders operating in the UAE are forecast to increase during the third quarter of 2018

Emirates NBD Bank is seen in Dubai's Jumeirah neighbourhood. Image used for illustrative purpose.

Emirates NBD Bank is seen in Dubai's Jumeirah neighbourhood. Image used for illustrative purpose.

REUTERS/Ghazal Watfa

Mubasher: Investors in the UAE stock markets are anticipating the companies’ third-quarter financial results, amid expectations of good profits by major companies, particularly banks that have witnessed a dazzling year on the back of successive interest rates.

Profits of the biggest lenders operating in the UAE are forecast to increase during the third quarter of 2018, led by Dubai Islamic Bank (DIB), according to a recent research note conducted by Bahrain-based SICO Bank.

Earlier on Wednesday, DIB reported a 12.1% year-on-year profit rise for the first nine months of 2018, registering AED 3.701 billion, from AED 3.301 billion in the year-ago period.

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Emirates NBD’s third-quarter financial results are expected to see a 13% growth to AED 2.57 billion, while First Abu Dhabi Bank’s (FAB) profits are projected to jump 10% to AED 2.87 billion.

The research note expected Abu Dhabi Commercial Bank’s (ADCB) profits to grow 6% to AED 1.15 billion during the same period.

During the first six months of 2018, total profits of banks listed on the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) levelled up 14.5%, reaching AED 21.75 billion by the end of H1-18, according to Mubasher’s statistics.

Optimistic outlook

The outlook for earnings statements of the Emirati banks are optimistic, especially after raising the interest rates, which in return boosted their financial positions, senior financial analyst at Menacorp Financial Services Issam Kassabieh stated.

The large decrease in provisions is also expected to shore up the banks’ financial results, Kassabieh added.

The analyst further noted that overseas expansion implemented by some lenders, especially FAB that is planning to boost footprint in Saudi Arabia, and Emirates NBD that would acquire a Turkish bank, will support the upbeat outlook for disclosures of the UAE’s banks.

Loan portfolio

Portfolio of retail loans is forecast to increase, which would enhance the GCC nation’s economy by carrying out many construction projects, CFO and chief market analyst at Asr Financial Brokerage Vijay Falisha noted.

Falisha affirmed that raising interest rates, in addition to the decline in provisions, would push up the banks’ profits.

Translated by: Mohamed Hesham Azab

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