Arab Today, arab today adib posts 5 increase in earnings despite provisions
Last Updated : GMT 16:54:26
Arab Today, arab today
Arab Today, arab today

ADIB posts 5% increase in earnings despite provisions

Arab Today, arab today

Arab Today, arab today ADIB posts 5% increase in earnings despite provisions

Abu Dhabi - Arabstoday

Abu Dhabi Islamic Bank (ADIB) said yesterday its fiscal second-quarter net profit rose 5 per cent on year to Dh316.6 million on the strength of its main banking business. The lender, however, saw a substantial increase in its total credit provisions and impairments. Net revenue rose 17.1 per cent on the year to Dh875.6 million during the second quarter, ADIB said in a statement. Strong year-on-year customer activity in the retail banking unit saw ADIB\'s customer numbers increase by 13.6 per cent since the second quarter of 2010 to more than 439,000 customers. ADIB\'s total credit provisions and impairments for the second quarter rose 75.2 per cent on year to Dh235.8 million. Article continues below ADIB\'s shares on the Abu Dhabi Securities Exchange closed unchanged yesterday at Dh3.27. \"The second quarter of 2011 saw ADIB\'s management continue to take a conservative approach to the recognition of non-performing credit exposures and investments. As a result, the bank has taken an additional Dh148.9 million in credit provisions in Q2 2011, thereby increasing total credit provisions to Dh2.57 billion. In addition, a further Dh86.9 million in impairments was taken against the real estate subsidiary\'s portfolio,\" ADIB said. Record net profit Commenting on the bank\'s second quarter results, ADIB\'s chief executive Tirad Mahmoud said: \"The second quarter has seen us maintain our momentum, enabling us to post a record group net profit. More importantly, our banking operations delivered an outstanding quarterly net profit of Dh392.6 million, which reflects the underlying strength in our franchise, notwithstanding the changes in the regulatory environment relating to our personal banking business.\" \"ADIB\'s strategy to become a top-tier UAE bank and global Islamic bank remains on track despite the continued global economic challenges and events closer to home,\" he added. A banking analyst at EFG-Hermes, Shabbir Malek, told Gulf News ADIB\'s revenues during the second quarter were stronger quarter on quarter because of wider spreads, but the downside in the earnings is that its loan growth was relatively flat and the NPL (non-performing loan) ratio worsened quarter-on-quarter. \"The provisions ADIB took on Burooj Properties were quite high. Its income from fees and commissions were relatively stable, we had expected them to come down significantly due the new Central bank guidelines on retail fees for banks. That caused better than expected results,\" said Malek. \"The ADIB management has indicated that the loan growth is going to be weak in the second half of the year, which means there isn\'t a lot of potential for earnings growth in the second-half,\" Malek added.

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