UAE banks’ profits up 11.4% in 2012

Growth was due to lower provisions and lending recovery

National banks in the UAE performed better in 2012, with their net earnings increasing by around 11.4 per cent mainly because of lower provisions and a pick-up in lending, according to their balance sheets.

From around Dh20.67 billion in 2011, the net profits of the 17 national banks listed on the UAE bourse swelled to about Dh20.03 billion in 2012.

The figures, published in the Arabic language daily Alkhaleej, showed most banks performed better with the exception of government-controlled Abu Dhabi Commercial Bank (ADCB), which reported lower earnings.

Emirates NBD, the largest bank in the UAE, reported net profits remained unchanged while the earnings of Dubai Islamic Bank and Bank of Umm Al Quwain were also stable.

National Bank of Abu Dhabi, also controlled by the government, recorded the highest profits of around Dh4.3 billion in 2012, followed by Abu Dhabi’s First Gulf Bank, with about Dh4.1 billion. ADCB came third with around Dh2.7 billion while Emirates NBD netted the fourth highest income of Dh2.5 billion.

“The good performance last year was due to the upturn in the domestic economy, higher project finance by banks, a pick up in their loans and lower provisions,” said Ali Ajjaj, an analyst at the Sharjah-based Sharhan Securities and Investment.

Official data showed lending by the UAE bank sector picked up in 2012 by around 3.4 per cent compared with less than two per cent in the previous two years. But growth remained dwarfed by the credit boom recorded in 2007 and most of 2008, when loans grew by more than 30 per cent before sharply slowing down due to the global crisis.

Figures by the Central Bank showed banks have also put brakes on a massive provisioning drive they launched in the wake of the 2008 global fiscal turmoil, with such provisions by the country’s banks totaling around Dh10 billion during the first 11 months of last year compared with Dh12 billion in the previous year.

In 2011, the UAE’s 23 national banks and 28 foreign units reported an increase of around 18.2 per cent in their net profits. From around
Dh22.5 billion in 2010, the profits swelled to nearly Dh26.6 billion in 2011.

 

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