Abu Dhabi Islamic Bank's (Adib) net profit fell 30 per cent to Dh193.4 million ($52.65m) in second quarter of 2009 from Dh275.7m a year earlier.
Net profit for the first half of 2009 at dropped 11.2 per cent to Dh461.8m due to lower investment income of Dh156.2m in the real estate subsidiary and credit loss provisions amounting to Dh 171.4m in second quarter of 2009.
Revenues for the first half rose 7.1 per cent to Dh1.178.3bn.
Total assets grew to Dh 58.1bn in the first half of 2009, up 20.9 per cent from first half of 2008.
Customer deposits increased to Dh43.6bn in the first half of 2009, up 29.2 per cent from first half of 2008.
The bank took Dh171.4m in provisions against credit losses in the second quarter of 2009. Provisions cover 2.2 per cent of the gross customer financing portfolio.
Tirad Mahmoud, CEO, said: "Despite the major credit loss provisions that were taken in Q2 2009 and the major decrease in real estate investment income (of Dh147.7m). Our profitability has remained strong in the second quarter. The strong performance of our banking activities provided a 32 per cent increase in net profit versus the first half of last year and a 49 per cent increase over the second quarter of 2008."
Explaining the reason for increasing credit loss provisions, Tirad said: "The credit environment remains weak and we expect the rest of this year to remain challenging with further provisioning necessary. In early 2008, we started to build our provisions given our then view of the deepening economic downturn. While there are now some signs of recovery we will continue with our conservative approach. We are actively engaged with our clients who have been impacted by the current economic conditions and are working with them to develop solutions that will enable them to meet their commitments."
Capital adequacy ratio at the end of June 2009 stood at 15.3 per cent without including the Federal Government's deposit in Tier II Capital as ADIB is still in the process of converting the Dh 2.2bn of deposits. After the conversion of the deposit, the CAR will increase to 20.3 per cent.
Among the bank's subsidiaries, its real estate firm Burooj took a hit and posted net loss of Dh14.4m during the first half of this year against the profit of Dh141.8m in H1 2008.
"While the sector remains under pressure, Abu Dhabi is resilient and the future is starting to look promising. We expect Burooj to start making a positive contribution to our results before the end of the year and maintain the momentum going into 2010," the bank's statement said.
Abu Dhabi Islamic Finance Services, its brokerage arm, returned to profitability with a net profit of Dh6.1m in the second quarter of 2009 versus a loss in the first quarter of this year.
Tirad said: "Our wealth management business is expected to come on stream later this year providing real support to our young private banking franchise."
We also expect to see a pick-up in our business banking and corporate banking units. Continued growth in core business activities, robust liquidity and a well capitalised balance sheet are some key positives we aim to build on."
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