Abu Dhabi Islamic Bank third-quarter profit edges up

ADIB profit increased to Dh508.9 million in the three months ended September. Mona Al Marzooqi / The National

Abu Dhabi Islamic Bank, the biggest Sharia-compliant lender in the emirate, said that its third-quarter profit rose 1 per cent, buttressed by higher revenue even as impairment charges rose.

The bank’s chief executive sounded a note of caution going forward, saying the lender would refrain from taking on too much risk amid a global economic slowdown.

Profit increased to Dh508.9 million in the three months ended September compared with Dh503.2m in the same period last year. Net revenues rose 6.6 per cent to Dh1.37 billion versus Dh1.28bn in the same period of 2015.

“The levels of activity and growth in the major economies around the world remain challenging,” said Tirad Al Mahmoud.

“As a result, we continue to forecast modest new customer financing growth and, where credit extension is targeted, will continue our practice of only doing so in such a manner that the risk-related returns are commensurate with our long-term regulatory capital needs and return of shareholders’ equity goals.”

This month, ADIB said it was boosting its digital capabilities in an attempt to attract more young people to the lender.

The bank said it had teamed up with the German online lender Fidor to build a digital interface, aimed at millennials who no longer want to go inside a bank to open an account or get a loan.

UAE banks have been under increasing pressure to find ways to attract customers ever since the price of oil began its long descent during the summer of 2014 and business has been slowing.

Deposits have dwindled as government-related entities withdrew funds to help fill a growing budget deficit.

Among the hardest hit have been small and medium-sized businesses that have struggled in the economic slowdown.

It was estimated by Abdul Aziz Al Ghurair, the head of the UAE Banks Federation, last November that small business owners may have left up to Dh5bn in unpaid debts before fleeing the country.

A credit sentiment report issued by the Central Bank last week showed that in the third quarter banks were less willing to lend and borrowers, especially owners of small businesses, and expats were less keen to tap debt.

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