Abu Dhabi Islamic Bank, the biggest Sharia-compliant lender in the emirate, said that first-quarter net profit rose 19.8 per cent as money set aside for bad debt fell by almost 25 per cent amid more conservative lending and signs of economic recovery.
The bank joins a roster of big lenders in the UAE showing similar signs of improvement in the first quarter as the economy picks up.
ADIB’s net profit rose to Dh577.5 million in the first three months of the year compared to Dh482m in the same period last year, the bank said.
The latest profit figure came in well ahead of analysts’ expectations. EFG-Hermes had forecast a profit of Dh481m, while NBAD Securities had forecast Dh454m.
One positive factor in the quarter was that the bank’s credit provisions and impairments fell 24 per cent to Dh164.4m from Dh216.2m.
At the same time, though, net customer financing, a measure of lending, fell 1.2 per cent to Dh77.3 billion at the end of the quarter compared to Dh78.3bn at the end of March 31 2016.
Overall, the bank’s revenues advanced 4.3 per cent to Dh1.37bn in the first quarter versus Dh1.32bn a year earlier.
“The UAE economy is seeing stronger growth in 2017 supported by a stabilisation of oil prices and continuation of the diversification strategy,” said Khamis Buharoon, ADIB’s vice chairman and acting chief executive.
“ADIB’s strategy has delivered a solid performance in the first quarter of 2017. Delivering premium customer service remains at the heart of the bank, and this approach has enabled us to welcome over 45,000 new customers in the last 12 months.”
Last week, the global consultancy Alvarez & Marsal said in its inaugural report on the country’s banking sector that there are increasing signs of recovery.
While the profitability of UAE banks has been dented in recent years, the industry remains in better shape overall than its global peers, the consultancy said. It said that despite the recent woes of the banking industry there are some signs to cheer, such as an increase in lending despite the provisions that banks are continuing to take, as well as tighter control on expenses.
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