First Gulf Bank Quarterly Profit Falls Short Of Estimates - Gulf Business
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First Gulf Bank Quarterly Profit Falls Short Of Estimates

First Gulf Bank Quarterly Profit Falls Short Of Estimates

The third-largest lender by assets in the UAE, made a net profit of Dhs1.42 billion for Q1 2015.

First quarter net profit from First Gulf Bank (FGB) failed to match analyst estimates on Wednesday despite rising by seven per cent thanks to higher fee income.

Defying fears that a lower oil price might start to impact the profitability of banks, the earnings of banks from the United Arab Emirates have been strong so far.

Illustrating this resilience, the larger Emirates NBD reported a 60 per cent year on year profit jump earlier on Wednesday.

FGB, the third-largest lender by assets in the UAE, made a net profit of Dhs1.42 billion ($386.7 million) for the three months ending March 31, up from Dhs1.33 billion in the same period a year ago, it said in an emailed statement.

However, the increase was below the average forecast of five analysts polled by Reuters, who expected a profit of Dhs1.51 billion.

FGB’s profit growth was driven by higher non-interest income, which includes fees from wholesale and consumer banking, which gained 13 per cent over the prior-year period to Dhs735 million.

The bank also set aside less cash for bad loans, with impairments down 15 per cent year on year to Dhs372 million.

These areas helped to offset a one per cent decline in net interest income, which was constrained by intense competition in the UAE’s banking sector.

This was emphasised by a decline in the bank’s net interest margin — the amount the bank earns from lending against the cost of the original funds — to 3.4 per cent in the first quarter of 2015 from 3.7 per cent a year ago.

Andre Sayegh, chief executive of FGB, said in the statement that competition would remain tough. FGB is shifting its business model away from relying on lending for generating revenue — 32 per cent of revenues came from fees in the first quarter, up from 29 per cent in the same three months of 2014.

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