ID :
73512
Mon, 08/03/2009 - 15:57
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High provisions depress banks' Q2 profits by 25%

Abu Dhabi, Aug 3, 2009 (WAM) - UAE national banks have performed well so far this year, but massive loan loss provisions depressed their net profits by nearly 25 per cent in the second quarter according to a report in "Emirates Business 24|7".
Balance sheets showed the combined net income of 16 local banks that have published results plunged to about Dh5.596 billion in the second quarter of 2009 from nearly Dh7.517bn in the first quarter of 2008.
It was one of the largest quarterly falls in the earnings of the country's banks in many years, but analysts believe their actual performance was good. "If you ask me whether the general performance of the UAE banks in the first two quarters of this year was good or bad, I will tell you it was good," said Humam Al Shamma, financial advisor at the Abu Dhabi-based Al Fajr Securities. "Their balance sheets showed the operating income was high, but when you look at their net profits for the first half of this year, they declined to about Dh10.6bn from nearly Dh13bn in the first half of 2008. The decline was mainly because most banks have allocated large provisions for non-performing loans. In other words, the banks performed well, but they are paying the price of the sharp expansion in their operations through 2008."
Shamma's figures showed the combined loan loss provisions of national banks soared by about Dh3.4bn to a record Dh5.18bn at the end of June. He said this increase was a result of bad performance of many portfolios of banks in stock markets and real estate as well as their loss in international markets.
"The global financial crisis has affected the assets of many regional financial institutions and at the same time hit debtors to local banks here and abroad, mainly the Saudi Saad and Algosaibi groups. These factors have forced the banks to sharply boost provisions, which depressed their net income. But I believe it is a good thing that banks take such provisions as it means they are determined to overcome the crisis and move to a more profitable phase."
Quarterly balance sheets of 16 listed national banks gathered by Emirates Business showed 11 banks reported lower net profits while five recorded higher earnings in the second quarter compared with the same period of 2008.
Banks with higher profits include National Bank of Umm Al Qaiwain, National Bank of Ras Al Khaimah, Invest Bank, United Arab Bank and Sharjah Bank.
Those with lower earnings are National Bank of Abu Dhabi, Emirates NBD, Abu Dhabi Islamic Bank, Mashreq, National Bank of Fujairah, Abu Dhabi Commercial Bank, Sharjah Islamic Bank, Union National Bank, Commercial Bank of Dubai, First Gulf Bank and Commercial Bank International.
The figures showed NBAD made the higher net profit of about Dh1.67bn, followed by ENBD at Dh852 million, FGB at about Dh725m, Mashreq at Dh460m and ADCB at Dh303m.
In terms of assets, the balance sheet showed a growth of about 7.3 per cent to Dh1,098bn at the end of June 2009 from Dh1,023bn at the end of 2008. ENBD by far had the largest assets of Dh281.8bn at the end of June while they stood at Dh181bn in NBAD, Dh147.9bn in ADCB, Dh102.5bn in FGB and Dh93.2bn in Mashreq. –


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