Abu Dhabi Commercial Bank (ADCB) announced on Sunday a 5.5 percent increase in third quarter net profit for the year 2018, roughly in line with analysts’ estimates.

“ADCB reported a par result with moderate earnings growth driven by lower provisioning and higher net interest income,” Chiro Ghosh told Zawya by email.

“The balance sheet performance was lacklustre, along with (a) deterioration in asset quality,” Ghosh added.

The bank reported a third quarter net profit attributable to shareholders of 1.15 billion United Arab Emirates dirhams ($313.1 million), compared to 1.09 billion dirhams a year ago. Data from Eikon showed that the mean analyst forecast for the bank’s net profit was 1.24 billion dirhams.

“The jump in ADCB profits is slightly below market expectations, nevertheless it is a good number which is reflective of (the) improving macro-economic scenario of UAE,” Vijay Valecha, chief market analyst at Century Financial Brokers told Zawya via email.

“The reduction of impairment allowances by 9 percent suggests an improvement in the quality of loans.” Valecha added.

Since the start of the year, ADCB’s stock price has gained 11.76 percent. The bank is the second-largest bank in Abu Dhabi in terms of market capitalisation, behind First Abu Dhabi Bank, which was created last year after a merger between First Gulf Bank and National Bank of Abu Dhabi.

According to data from Eikon, one analyst gave a ‘strong buy” rating on the stock, eight analysts gave a ‘buy’ rating, while two analysts recommended a ‘hold’ rating.

ADCB has been in merger talks with Union National Bank (UNB) and Al Hilal Bank, it announced in a statement to the exchange early in September. The Abu Dhabi government fully owns unlisted Al Hilal Bank and owns a majority in both ADCB and UNB. (Read more here).

The banking sector has been the biggest boost for the Abu Dhabi stock market in 2018, as an index of banking stocks on the exchange has increased in value by 24.19 percent so far this year, outperforming the main market index, which gained 12.38 percent from January to date.

On Sunday, Abu Dhabi’s index dropped 0.92 percent, Dubai’s index fell 0.81 percent, Saudi Arabia’s index edged up 0.16 percent, Qatar’s index dropped 0.38 percent, Kuwait’s index was mainly flat, Bahrain’s index fell 0.11 percent while Oman’s index gained 0.2 percent and Egypt’s index closed 0.88 percent lower.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(Gerard.aoun@refinitiv.com)

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