ADCB, Mashreq 2017 net profits rise, but miss analysts' forecast

Higher expenses, lower non-interest income impacts ADCB's fourth quarter profit

ADCB’s operating expenses rose 10 per cent in the fourth quarter to Dh800 million. Mona Al Marzooqi / The National.

Abu Dhabi Commercial Bank (ADCB) said on Sunday its fourth quarter net profit rose 7 per cent, below analysts’ estimates, as expenses rose and non-interest income shrank slightly.

Net profit attributable to equity shareholders in the three months to the end of December reached Dh1.07 billion compared with Dh1bn in the year-earlier period, the bank said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

The result missed the average analysts’ forecast of a fourth quarter net profit of Dh1.09bn, according to four analysts polled by Bloomberg.

Bank profitability in the UAE is expected to improve with the economic recovery and higher oil prices.  The financial profiles of GCC banks are set to stabilise by the second half of 2018 as they absorb the effect of softer economic conditions over the past two years, according to a report by the rating agency Standard & Poor’s published earlier this month.


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ADCB’s operating expenses rose 10 per cent in the fourth quarter to Dh800 million from Dh729m a year earlier.

Non-interest income dipped 1 per cent to Dh592m from 598m a year earlier. Total net interest and Islamic financing income rose 9 per cent to Dh1.71bn from Dh 1.57bn.

Full year net profit rose 3 per cent to Dh4.27bn from Dh4.14bn, also missing analysts' forecast.

Non-interest income for the year fell 4 per cent to Dh2.19bn due to weaker trading income, "driven by lower FX income against a very strong prior year, which benefitted from opportunistic trades," the lender said. Non-interest income accounted for 25 per cent of total income in 2017, compared with 27 per cent in 2016.

Full year general expenses were up 8 per cent to Dh1.07bn due to continued investment in the bank’s systems and infrastructure, including “a set of digital initiatives to enhance operational efficiency.”

Separately, Dubai-based Mashreq bank said on Sunday its full year net profit rose 6.5 per cent to Dh2.1bn, which came in below analysts’ estimates. The lender didn’t provide fourth quarter figures.

The average full year net profit estimate of two analysts polled by Bloomberg was Dh2.16bn.

Mashreq's chief executive Abdulaziz Al Ghurair said he was bullish about the bank's future.

“While there may be challenges ahead, I am confident that we are well-positioned to capitalise on the improving economic backdrop in the UAE,” he said. “I look forward to seizing these opportunities and continuing this momentum into 2018.”

ADCB and Mashreq’s performance is weak compared to some of the other banks that have reported their fourth quarter earnings.

Emirates NBD, Dubai's biggest lender, said earlier this month its net income rose 17 per cent year-on-year in the fourth quarter, broadly in line with analysts' estimates, as its interest income benefitted from the December interest rate hikes.

Dubai Islamic Bank, the emirate's largest Sharia-compliant lender, reported a 25 per cent surge in net profit to Dh1.15bn for the same period.