First Gulf Q2 profit up 13%

First Gulf Bank (FGB), UAE's second largest lender by market value, posted a 13 per cent rise in second quarter net profit, beating analysts' forecasts, helped by a rise in net interest income.

The lender made a net profit of Dh890 million ($242.5 million) for the three month period ending June 30, compared with Dh787 million in the prior-year period.

Analysts polled by Reuters had estimated an average profit of Dh885.3 million for the second-quarter.

Profit for the first six months of the year grew 3.4 per cent over the same period last year to Dh1.77 billion.

"Our strong business fundamentals coupled with the strong growth in our business operation, will now place us in a firmer position to increase lending to the targeted sectors in the coming quarters of 2011 and beyond," said Andre Sayegh, FGB's chief executive officer.

Net interest and Islamic financing income grew to Dh1.22 billion in second quarter, up 17 per cent over the prior year period. This represented 77 per cent of the bank's operating income and offset an 18 per cent drop in fees and commissions during the quarter.

Provisions for non-performing loans declined 4 per cent in the first half to Dh870 million, the bank said.

In June, FGB said it would raise its foreign share ownership limit to 25 per cent from 15 per cent to attract more investors.

FGB also launched a $3.5 billion Islamic bond or sukuk, according to a prospectus filed at the London Stock Exchange. Shares in FGB ended flat on Wednesday prior to the results. The stock has risen 2.1 per cent so far this year.

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