United Arab Bank (UAB), the Sharjah-based lender in the midst of restructuring following a spate of losses from debt gone sour because of the oil price crash, swung to a third quarter loss amid a drop in net interest and foreign exchange income.
The bank posted a loss of Dh5.39 million in the third quarter compared to a profit of Dh16.98m in the same period last year. Net interest income fell 12.2 per cent to Dh130m in the three months ended September from Dh148.1m in the same period last year. Foreign exchange income dropped 37 per cent to Dh10.3m in the third quarter from Dh16.34m in the same period last year, it said.
"With the transformation strategy nearing completion since it started in the second half of 2015, non-core assets now represent 2 per cent of the loan base," said Samer Tamimi, the bank's chief executive.
"The benefits of branch rationalisation have resulted in operating expenses being robustly managed, recording 9 per cent reduction against (the) prior year. These positive results provide further tangible evidence that our revised strategy is appropriate given the economic environment."
As well as grappling with bad debt, UAB is facing a slowdown in lending that is crimping the profitability of banks over the past year amid sluggish economic growth and subdued consumer confidence in the wake of a three-year oil slump that has more than halved prices of their 2014 highs.