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UPDATE 1-UAE lender ADIB Q2 net profit jumps, cites higher revenue
July 20, 2014 / 12:06 PM / 3 years ago

UPDATE 1-UAE lender ADIB Q2 net profit jumps, cites higher revenue

* Q2 net profit 454.8 mln dhs vs 371.4 mln dhs yr-ago - statement

* Q2 revenue 1.08 bln dhs, up 13.9 pct

* Expects to complete Barclays retail takeover by year-end (Adds detail, context)

By Stanley Carvalho

ABU DHABI, July 20 (Reuters) - Abu Dhabi Islamic Bank (ADIB), the largest sharia-compliant lender in the emirate, beat analysts’ estimates on Sunday as it posted a 22.5 percent jump in second-quarter net profit as core business income boosted revenues.

The lender, which in May got regulatory approval to purchase much of Barclays’ retail operations in the United Arab Emirates, made a net profit of 454.8 million dirhams ($123.8 million) in the three months to June 30 compared to 371.4 million dirhams in the same period of 2013, a statement said.

Three analysts polled by Reuters earlier this month forecast an average net profit of 406 million dirhams..

ADIB cited a 13.9 percent increase in net revenue, which climbed to 1.08 billion dirhams, for the increase in profit.

“As was the case in the first quarter of the year, it is noteworthy that the record quarterly performance reflects the sustainable strength of our core banking businesses,” chief executive Tirad al-Mahmoud said in the statement, adding it wasn’t just relying on lower provisioning for higher profits.

Improving asset quality has been a key driver of UAE banks’ profit growth in recent quarters as the country recovers from a sovereign-related debt crisis and the bursting of a local real estate at the end of the last decade.

Fellow Abu Dhabi lender Union National Bank posted a 5.6 percent increase in second-quarter net profit earlier on Sunday on lower impairments.

Mahmoud added legacy issues from the previous crisis were still impacting the UAE banking system, while the impending start-up of the country’s credit bureau - allowing banks for the first time to check a customer’s borrowings from all UAE lenders - would bring ‘welcomed clarity’ to individuals’ risk profiles.

ADIB is one of the banks on the creditor committee for Amlak Finance, which said earlier this month it had made a new offer to strike a deal on debt worth $2.7 billion and solve the last major hangover from the property crash.

ADIB booked 175.8 million dirhams of provisions in the second quarter, down 2.2 percent year-on-year.

Loans extended by the bank stood at 64.9 billion dirhams at June 30, up 15.4 percent year-on-year, while deposits grew 18.2 percent over the same timeframe to 79 billion dirhams.

ADIB expects to complete the takeover of Barclays’ retail business in the UAE by the year-end, Mahmoud said. It is anticipated the purchase will add over 115,000 new customers to ADIB’s client base, taking it to 750,000 customers. ($1 = 3.6725 United Arab Emirates Dirhams) (Editing by David French)

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