Abu Dhabi Commercial Bank's first-quarter profit fell by 18 per cent amid lower income from loans and fees as well as an increase in provisions.
Net profit slipped to Dh1.02 billion in the first three months of the year versus Dh1.24bn in the same period the previous year, the bank said.
Total net interest and Islamic financing income dropped by 4 per cent during the quarter to Dh1.57bn versus Dh1.64bn in the corresponding period last year. Non-interest income decreased by 2 per cent to Dh539 million in the first quarter compared with Dh551m in the same period last year.
Impairment charges jumped by 46 per cent to Dh352m in the first quarter compared with Dh241m in the same period last year.
“In line with our prudent approach to risk management and in response to the prevailing market conditions and macro headwinds, we have increased our provision levels in the first quarter of 2016 compared to the first quarter of 2015, which benefited from one-offs which were not repeated this year,” said Ala’a Eraiqat, the chief executive.
Demand for debt in the UAE was anecdotally declining last year after the price of oil started its long descent in the previous year and bankers expect that loan growth will continue to diminish this year amid declining business confidence and higher credit hurdles that those demanding debt need to overcome to get it.
At the same time, defaults have been rising, especially among small businesses.
mkassem@thenational.ae
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