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Abu Dhabi’s Union National Bank Q1 Net Profit Rises 3.5%

Abu Dhabi’s Union National Bank Q1 Net Profit Rises 3.5%

The bank made a profit of Dhs512.1 million ($139.4 million) in the quarter, up from Dhs494.9 million a year earlier.

Union National Bank (UNB), 50 per cent owned by the Abu Dhabi government, posted a 3.5 per cent rise in first-quarter net profit on Monday due to lower provisioning, beating estimates of analysts who had expected its earnings to shrink.

The fifth-largest lender on the Abu Dhabi exchange by market value reported a net profit of Dhs512.1 million ($139.4 million) in the quarter, up from Dhs494.9 million a year earlier, according to a bourse filing.

Six analysts polled by Reuters had on average forecast that UNB’s profit would fall 3.9 per cent, although their forecasts were based on a slightly different figure that excludes profit owed to minority shareholders of the bank’s subsidiaries.

Under this figure, net attributable profit, UNB’s net profit rose 3.6 per cent to Dhs509.1 million.

Banks in the United Arab Emirates have reported strong earnings growth for the first quarter as they benefit from the improving economic picture in the Gulf Arab nation, especially in the key real estate sector which was buffeted following a 2009 crash.

“The increase in the quarterly profit for the group was driven by consistent business growth underpinned by continuing improvement in the asset quality measures, robust liquidity and strong capital position,” Mohammad Nasr Abdeen, chief executive of UNB, said in the statement.

UNB’s profit increase was aided by a 65 per cent reduction in impairment charges, which fell to Dhs44 million in the first quarter of 2014.

This helped to offset a four per cent decline in net interest income and income from Islamic financing, which fell due to a reduction in its net interest margin to 2.8 per cent in the first quarter of 2014 from 3.06 per cent in the same period last year.

National Bank of Abu Dhabi’s chief executive Alex Thursby had warned following its first-quarter earnings that net interest margins – the gap between the rate a bank pays out on deposits and the rate it charges for lending – were under pressure at UAE lenders from fierce competition and global interest rate pressure.

UNB, like other UAE banks, reported a big jump in lending on the back of strong economic growth in its home market. Loans and advances were up six per cent year-on-year to Dhs61.7 billion on March 31.

Customer deposits fell two per cent over the same timeframe to Dhs66.7 billion.

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