Abu Dhabi: Union National Bank (UNB) Sunday reported its fourth quarter profit more than tripled from the same quarter in 2008 to Dh222 million, but increased provisioning and the decline in value of investment properties have kept the results below analysts' expectations.
"The challenging credit conditions have resulted in increased delinquencies in line with the global trends," the bank said in a statement citing the increase in non-performing loans (NPL) as a ratio of its total loan book from to 1.5 per cent from 1.3 per cent in 2008. "The increase in [NPLs] was partly due to the group's exposure to Algosaibi, a Saudi-based group which was recognised as a non-performing advance in 2009."
In September, UNB said it is owed $60.5 million (Dh222 million) by Algosaibi. The Central Bank has since required all banks with exposure to Algosaibi or Sa'ad Group, another debt-ridden Saudi conglomerate, to provision for at least 50 per cent of the amounts owed.
UNB, the sixth largest bank in the UAE by assets, reported annual profits fell 20 per cent to Dh1.16 billion due to the continued fall of investment properties values. The bank did not reveal the extent of the decline and release of full financials is pending Central Bank review.
Assets grew 16 per cent to more than Dh76 billion while deposits and loans advanced marginally to Dh51.3 billion and Dh50.8 billion, respectively.
"Judging by the 16 per cent growth in their assets and flat loan growth, they have the capability to lend. But they've decided to keep their money with the central bank in Certifcate of Deposits until market sentiment improves," said Dheeraj Lakhwani, banking analyst at Prime Emirates.
