UPDATE 2-National Bank of Abu Dhabi's Q2 profit falls 9.3 pct
* NBAD posts 9.3 pct fall in Q2 profit
* Surge in provisions behind the decline
* Earnings higher than analyst forecasts (Adds analyst comment, details)
By Stanley Carvalho
ABU DHABI, July 28 (Reuters) - National Bank of Abu Dhabi NBAD.AD, the biggest United Arab Emirates bank by market value, reported a 9.3-percent decline in quarterly profits on Tuesday, due to a surge in provisions.
NBAD said it had a net profit of 907 million dirhams ($246.9 million) in the second quarter, compared to 1 billion dirhams in the same period last year.
Analysts polled by Reuters had forecast, on average, second quarter net profit of 726.4 million dirhams.
While the profits topped forecasts, the bank took a hit against bad loans and was forced to boost its provisions, along with other banks in the region against the backdrop of an economic downturn.
NBAD said it took 500 million dirhams in provisions in the first half of 2009, without offering a quarterly breakdown, from 145 million dirhams in the same period in 2008.
"Results are strongly ahead of expectations at the operating profit line, and with provisioning more or less as expected, this has driven a very strong bottom line number," Raj Madha, a Dubai-based analyst at EFG Hermes said.
NBAD said it holds $7.5 million in exposure to Ahmad Hamad Algosaibi & Bros and a $3.4-million exposure to a Saad Group SAADG.UL sukuk, or Islamic bond. Banks across the region have been forced to take provisions against the two debt-ridden Saudi conglomerates.
Deepak Tolani, senior associate equity researcher at Al Mal Capital also said that provisions were in line with expectations, adding that "non-interest income ... may not be sustainable at this high level in the coming quarters," he said.
The bank also said its board had approved a 10 percent share buyback, which is still subject to regulatory approval.
NBAD's shares closed up 4.3 percent higher on the Abu Dhabi bourse.
"The global outlook remains uncertain, but the strong investment in infrastructural projects by the government, is expected to support the economic growth of Abu Dhabi and counter, to some extent, the slowdown in the economy," NBAD's Chairman Nasser al-Sweidi said in a statement.
Abu Dhabi as been pouring billions of dollars into infrastructure projects as it benefited from a six-year boom from high oil prices. (Writing by Nicolas Parasie; Editing by Rupert Winchester)
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