Abu Dhabi: Abu Dhabi Islamic Bank reported Dh508.9 million in net profit for the third quarter of this year, inching up 1.1 per cent over the Dh503 million reported in the same period last year.
The figure brings net profit for the first nine months of 2016 to Dh1.5 billion — up 2.9 per cent over the Dh1.4 billion recorded in the same period in 2015.
Meanwhile, the group’s revenues rose 6.6 per cent in Q3 2016 to reach Dh1.4 billion, as revenues for the first nine months grew 7.4 per cent to Dh4 billion.
Credit provisions and impairment charges in the third quarter, however, jumped nearly 40 per cent year-on-year to Dh267.7 million as impairment costs continue to grow within UAE banks on the back of slower economic growth and jobs being axed.
Abu Dhabi Commercial Bank, for example, reported on Sunday a six-fold jump year-on-year in its Q3 impairment costs, which reached Dh380 million. Another Abu Dhabi-based bank, Union National Bank, also reported higher impairment costs in Q3 of Dh192 million — a 70 per cent quarter-on-quarter jump as analysts said they expect to see further impairments in the next few quarters.
In the third quarter, ADIB’s provision coverage ratio was 90.2 per cent, which is flat compared to Q3 2015 but higher than the 71.2 per cent and 60.7 per cent in Q3 2014 and Q3 2013 respectively.
At the end of September 2016, the ratio of non-performing loans (NPLs) was 4.4 per cent — up from 4 per cent at the same time last year. ADIB said in its report that the rise in NPLs prompted the bank to continue its “conservative practice of building provisions and took an additional Dh260.5 million in total credit provisions.”
ADIB said it also remained prudent on funding and capital management given the continued challenging environment.
“The levels of activity and growth in the major economies around the world remain challenging. As a result, we continue to forecast modest customer financing growth and, where credit extension is targeted, will continue our practice of only doing so in such a manner that the risk-related returns are commensurate with our long-term regulatory capital needs and return of shareholders equity goals,” said Tirad Al Mahmoud, group chief executive officer of ADIB.
During the quarter, the bank continued to lay off staff, cutting 143 jobs, with headcount in the UAE now at 2,206 from 2,349 headcount in Q2 2016.
Customer deposits stood at Dh98.6 billion at the end of 30 September 2015 — a 10.3 per cent increase.
