Business | Banking
ADIB profits hurt by realty unit loss
Increased provisioning and a loss-recording real estate unit have forced Abu Dhabi Islamic Bank (ADIB) profits down by 30 per cent for the second quarter to Dh193 million, the bank reported on Wednesday.
- By Ahmed A. Namatalla, Staff Reporter
- Published: 22:33 July 29, 2009
Abu Dhabi: Increased provisioning and a loss-recording real estate unit have forced Abu Dhabi Islamic Bank (ADIB) profits down by 30 per cent for the second quarter to Dh193 million, the bank reported on Wednesday.
The bank recorded second-quarter provisions against bad loans of Dh171.4 million, bringing its first-half total to Dh247 million. ADIB's real estate arm, Burooj, recorded a first-half loss of Dh14.4 million, compared with almost Dh142 million in the same period last year.
The bank, recently cited in local media reports to have been exposed to Saudi Arabia's Saad and Algosaibi Groups, has neither confirmed nor denied these reports, citing their clients' privacy and "regulatory restrictions."
So far, only National Bank of Abu Dhabi has disclosed exposure to the Saudi groups, reporting $10.9 million (Dh40 million) on Tuesday.
Abu Dhabi Commercial Bank and Emirates NBD have reported 51 per cent and 41 per cent declines, respectively, in second-quarter profits due to increased provisioning.
"The credit environment remains weak and we expect the rest of this year to remain challenging with further provisioning necessary," ADIB CEO Tirad Mahmoud said.
As of press time, ADIB had not released its detailed financial statements.
Regarding Burooj, the bank said its "prudent measures" have helped limit the company's losses.
Most real estate developers have reported significantly lower profits year-on-year because of declining property and land values.
Aldar and Sorouh have seen their second-quarter profits decline by 71 per cent and 75 per cent, respectively, compared with last year's figures.
"While the sector remains under pressure, Abu Dhabi is resilient and the future is starting to look promising," Mahmoud said.
"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."
ADIB's banking operations reported strong growth, including a 27 per cent increase in its first-half revenue to Dh1.1 billion compared with last year, as well as a 31.5 per cent rise in net profits to Dh479 million.
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