Abu Dhabi Islamic Bank Q4 Net Profit Rises 19.3%

Abu Dhabi Islamic Bank said on Sunday it planned to boost its capital base to help support future growth, after setting aside less cash for bad loans helped it post a 19.3 per cent rise in fourth-quarter net profit.

Banks in the United Arab Emirates have enjoyed a strong reporting period so far, with lenders recording higher profits on the back of robust local economic conditions.

They are also beginning to look at bolstering their reserves after a period of high lending growth. Dubai Islamic Bank sold a capital-boosting sukuk earlier this month, and Mashreq is awaiting shareholder approval before selling a version which boosts Tier 2, or supplementary, capital.

“The Bank intends further enhancing its capital to a level that supports sustaining growth and is in line with global best practice,” ADIB said in its earnings statement, adding its ratios were still above minimums set down by the UAE central bank.

At the end of 2014, its Tier 1, or core, capital stood at 13.87 per cent and its capital adequacy ratio — a combination of Tier 1 and Tier 2 capital — was 14.36 per cent. The regulator requires eight per cent and 12 per cent respectively.

Tirad al-Mahmoud, chief executive of ADIB, added it would take the necessary actions, including retaining more earnings, to bolster its capital.

ADIB’s board has proposed paying an annual cash dividend of Dhs0.2334 per share. The bank paid a dividend of Dhs0.24 per share for 2013, according to Thomson Reuters data.

This was announced as the emirate’s largest sharia-compliant bank disclosed it made a net profit of Dhs409.6 million ($111.5 million) in the three months to Dec. 31, up from Dhs343.3 million in the prior-year period.

Analysts at Beltone Financial and EFG Hermes had forecast ADIB would make a quarterly net profit of Dhs327 million and Dhs443.3 million respectively.

Boosting the bank’s performance was a 19.3 per cent decline in impairments to Dhs178.7 million.

The UAE’s buoyant economy, which was expected to grow by 4.4 per cent in 2014, has helped improve asset quality after problems with debt at sovereign-linked companies and a local property market crash at the turn of the decade.

It is also fuelling lending growth in the country, with ADIB recording an 18.2 per cent increase in loans to Dhs73 billion.