Arab Today, arab today unb second quarter profit rises 23
Last Updated : GMT 06:58:51
Arab Today, arab today
Arab Today, arab today

UNB second quarter profit rises 23%

Arab Today, arab today

Arab Today, arab today UNB second quarter profit rises 23%

Dubai - Arabstoday

Abu Dhabi-headquartered Union National Bank (UNB) yesterday reported a net profit of Dh418.89 million for the second quarter of 2011, up 23.2 per cent compared to the Dh339.96 million reported in the same period last year. The bank\'s net income for the second quarter exceeded analysts\' forecasts largely on account of improved net interest margins, despite a surge in impairments. The bank reported a net profit of Dh878.7 million for the first half of the year, an increase of 22 per cent compared to the first half of 2010. The operating profit for the six-month period ended June 30 was Dh1.10 billion, up 17.1 per cent compared to the Dh944.4 million reported in the first half of 2010. Article continues below \"The Bank continues to follow a prudent strategy as per plans, with a strong focus on its core lines of businesses,\" said Mohammad Nasser Abedin, chief executive officer of UNB. The financial performance remains satisfactory amid the continuing challenging and uncertain market conditions,\" he added. The bank\'s net impairment losses for the second quarter increased 21 per cent to Dh151 million compared to Dh124.6 million in the second quarter of 2010. NPLs rise Non-performing loans (NPLs) (excluding Dubai World) rose 10bps to 1.5 per cent in the second quarter of 2011. The NPL coverage amounted to 153 per cent, down slightly from 159 per cent in the first quarter of 2011. \"Including the Dubai World exposure, the NPL coverage is 51 per cent. UNB will need to further bolster its collective provisions,\" said Jaap Meijer, head of Banks Research at AlembicHC. Last month AlembicHC raised its price target on the company to Dh4.5 from Dh3.5 based on expectations of higher net interest margins. Net interest income for the second quarter increased to Dh512 million compared to Dh395.6 million in the same period last year. The bank attributed the increase to loan growth in the second quarter. The operating income for the six month period ended June 30, 2011, was Dh1.45 billion, an increase of 13.2 per cent compared to the six-month period immediately preceding it. This was led by an increase in net interest income and income from Islamic financing, which was up by 19.1 per cent to Dh1.12 billion in first half of this year. The non-interest income decreased by 3.3 per cent to Dh330.2 million compared to Dh341.4 million in the second half of 2010, mainly due to the implementation of regulations mandated by the Central Bank of the UAE on lending to individual customers, which came into effect from May 1 of this year. \"Fee income and, therefore, total non-interest income was weak due to the new retail regulations,\" said Naveed Ahmad, senior Financial Analyst with Global Investment House. Performance satisfactory \"Investment gains were higher but not high enough to offset the decline in fee income. We remain satisfied with the bank\'s performance for the quarter though continuation of similar provisions and weak loan growth could lead us to revise our estimates for the full year,\" he added. UNB\'s loans and advances of Dh56.2 billion as at June 30, 2011, was up by 5.1 per cent year-on-year, but was marginally lower than its value for the previous year-end. Customers\' deposits reached Dh58.5 billion as on June 30, 2011, an increase of 15.2 per cent compared to the first six months of 2010. The loan to deposit ratio improved to 96.2 per cent on the same date from 105.5 per cent as on June 30, 2010. The advances to stable resources ratio as of June 30 remained below the 100 per cent level stipulated by the Central Bank of the UAE. Liquidity position remained comfortable, with 21.4 per cent of the total assets as on June 30 being deployed in liquid assets.

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