Dubai: United Arab Bank (UAB) reported a net profit of Dh49.75 million for the first nine months of 2017, down 43 per cent compared to Dh87.74 million reported in the same period last year.
For the third quarter of the year the bank reported a net loss of Dh5.39 million compared to Dh16.98 million in the third quarter of 2016.
The bank reported 9 per cent decline in operating expenses and 37 per cent decrease in provision for credit losses in the third quarter of 2017 compared to the same period last year.
The performance in the third quarter reflects continued positive traction against the bank’s Transformation Strategy set out in the second half of 2015 to become a safer, stronger and sustainable Bank.
UAB is continuing to strengthen its core businesses; rundown ‘non-core’ higher risk portfolios; streamline the cost base; and maintain key banking fundamentals, the bank said in an emailed statement.
“The board is pleased to see the improved operating performance continue into the third quarter of 2017 as the bank continues to progress well against its strategy. We believe that our revised low risk and UAE-focused business model, together with the simplification and transformation of the bank, positions us well to continue doing the right thing for our customers and deliver sustainable returns for our shareholders,” said Shaikh Faisal Bin Sultan Bin Salem Al Qasimi, Chairman of the Board of Directors.
‘Non-core’ portfolio continued on its downward trajectory with further contraction of more than 50 per cent recorded in the third quarter of 2017 and now represent 2 per cent of the total loan base. The bank said it will continue to recycle risk weighted assets released from the deleveraged ‘non-core’ portfolios to support growth of ‘core’ activities, whilst ensuring UAB captures all available cross-sales opportunities.
“With the transformation strategy nearing completion since it started in the second half of 2015, non-core assets now represent 2 per cent of the loan base. The benefits of branch rationalisation have resulted in operating expenses being robustly managed recording 9 per cent reduction against prior year. These positive results provide further tangible evidence that our revised strategy is appropriate given the economic environment,” said Samer Tamimi, acting chief executive officer of UAB
Provision for credit losses for the nine months were at Dh210 million, 37 per cent lower than the same period in 2016, given prudent risk management and focused reduction in risk weighted assets. Going forward, although provisions have decreased significantly, UAB’s transition to a lower risk model should see these moderate further in the coming years.
“Our strategy remains on track, with both the board and management team remaining vigilant and ensure we continue to enhance our enterprise risk management capabilities in line with our ultimate objective to build a lower risk, more efficient and sustainable bank,” said Tamimi
