ABU DHABI- Abu Dhabi Commercial Bank , which formalised a merger with two other banks last week, reported a 5 percent fall in first-quarter profit, hurt by lower interest income, missing analysts’ forecasts.
Net interest and Islamic financing income of 1.71 billion UAE dirham ($465.58 million) fell 7 percent from the first quarter of 2018, as the bank said its move to raise long-term funds hit its profitability.
"Bottom line was impacted by higher cost of funds underpinned by a conscious decision to increase long-term time deposits and wholesale funding to meet the evolving regulatory liquidity requirements," said Deepak Khullar, chief financial officer.
ADCB also said the bank's integration with Union National Bank and Al Hilal Bank will be in phases over the next 18 to 24 months.
The merger makes the combined entity the third-biggest lender in the United Arab Emirates after First Abu Dhabi Bank and Emirates NBD
ADCB made a net profit of 1.15 billion dirhams ($314 million) in the three months ending March 31, 2019 it said in a statement. That compared with 1.21 billion dirhams profit made in first quarter 2018.
SICO Bahrain had forecast ADCB would make a first-quarter profit of 1.29 billion dirhams, while EFG Hermes estimated 1.30 billion dirhams.
The bank, however, reported a higher non-interest income of 566 million dirhams, up 8 percent over the first quarter 2018.
Loans increased 2 percent to 169 billion dirhams and deposits grew 4 percent in the quarter over December 31, 2018.
ADCB said the merger between the three banks is expected to deliver annual cost synergies of approximately 615 million dirhams.
($1 = 3.6728 UAE dirham)
(Reporting by Stanley Carvalho; Editing by Saeed Azhar and Louise Heavens) ((email@example.com; + 9712 6444431; Reuters Messaging: firstname.lastname@example.org))