UAE Bank NBAD’s First Quarter Net Profit Hampered By Costs

NBAD made a net profit of Dhs1.42 billion in the first quarter of 2015.



National Bank of Abu Dhabi (NBAD) missed analyst expectations as it posted a marginal increase in first-quarter net profit on Wednesday, as a rise in interest income and lower bad loan charges were offset by higher expenses.

The earnings from the largest lender by assets in the United Arab Emirates come against a broadly-positive results season for banks in the Gulf Arab nation, as banks generally maintained the strong momentum from the previous year despite concerns over the impact of lower oil prices on the wider economy.

Dubai’s Emirates NBD led the way with a 60 per cent rise in net profit, while the earnings of First Gulf Bank, another big Abu Dhabi lender, missed analysts’ forecasts.

NBAD made a net profit of Dhs1.42 billion ($386.6 million) in the three months to March 31, the bank said in a statement.

This was up on the Dhs1.41 billion in the corresponding period of 2014, but fell short of the Dhs1.49 billion forecast by analysts polled by Reuters.

Weighing down the earnings of NBAD, almost 70 per cent owned by the Abu Dhabi government, was a 29 per cent jump in expenses, with the largest chunk of that attributed to staff costs, followed by general and administrative expenses, the bank said.

Under chief executive Alex Thursby, the bank has been building up its focus around a corridor of emerging markets from West Africa to East Asia, recruiting staff, refurbishing branches and investing in information technology systems.

Expenses were expected to remain around first-quarter levels for the remainder of 2015, it said.

The bank’s performance was also hit during the quarter by a 3.9 per cent dip in non-interest income. It blamed lower investments and derivatives income because of one-offs during the same period of last year and smaller brokerage income from adverse market conditions.

Helping to bolster results was net interest income, derived from activities such as lending, which climbed 13.4 per cent year on year. Impairment charges sank 32 per cent over the same period as asset qualities improved.