Union National Bank generated more income from its borrowers despite an overall drop in lending, its first-quarter results show.
Union National (UNB), based in Abu Dhabi, yesterday announced a 20.3 per cent rise in net profit, compared with the first quarter of last year, to Dh456 million (US$124.1m). Income from loans and Islamic financing rose 11.5 per cent to Dh532.2m, even though net loans and advances fell 0.4 per cent to Dh56.2 billion.
Fee income, which will be limited in coming months after regulations from the Central Bank, rose 8.5 per cent to Dh140m.
"The uncertain economic environment globally continues to impact consumer and business confidence, with the demand for credit remaining muted," the bank said in a statement to the Abu Dhabi Securities Exchange.
Impairment losses rose 25.7 per cent to Dh123.5m but recoveries of Dh53.7m, which had been written off, kept total impairments 24 per cent lower than last year's first quarter, at Dh69.8m.
Non-performing loans, excluding the bank's exposure to Dubai World, was steady at 1.4 per cent of total loans. Customer deposits rose 2.8 per cent to Dh59.5bn.
The bank's shares jumped 6.47 per cent in trading yesterday to Dh3.60 after the earnings were released, reaching highs not seen since September 2009.
Analysts said UNB's stock looked undervalued. "The stock continues to offer attractive value and fully reflects exposures to Dubai World and Dubai Holding," said Jaap Meijer, of Alembic HC Securities.
