Abu Dhabi Islamic Bank holds the line as profit rises slightly

Abu Dhabi Islamic Bank, the biggest Sharia-compliant lender in the emirate, said that its second quarter profit gained 1 per cent, boosted by income from investment and foreign exchange.

Net income increased to D507.5 million versus Dh502.6m in the same period the previous year, the bank said. Investment income jumped by 28 per cent to Dh123.7m in the second quarter from Dh96.5m in the same period last year. Profit from foreign exchange rose 16 per cent to Dh43.7m.

Despite the modest rise in profit, the bank’s chief executive sounded a note of caution, saying that the rate of new financing would probably slow amid a lower rate of economic growth. He said that the bank would not take on too many risks when it comes to lending amid an increasing number of defaults.

“We remain concerned about the current level of economic activity and growth in the region and the major markets around the world,” said Tirad Al Mahmoud, the bank’s chief executive.

“Our concern is further exacerbated by the rising level of defaults in an increasing number of client segments and industry sectors in the markets in which we operate.”

The UAE non-oil economy continued to expand last month, though still at the slower pace of recent months, and with cost pressures on producers increasing, according to the latest survey of purchasing managers by Emirates NBD.

The purchasing managers index (PMI), which tracks views in the non-oil private sector on a range of business climate indicators, was at 53.4 last month, down from 54 in May. Though a reading above 50 indicates expansion, the PMI in recent months has been well below the 56.3 average of the past three years as the cooling effect of lower oil prices continues.

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