Dubai: Abu Dhabi-based Union National Bank reported Dh496.7 million net profit for the third quarter, up by 7.3 per cent compared to Dh462.8 million in same quarter in 2010.
Sequentially, quarter-on- quarter the profit for the third quarter of 2011 increased 18.6 per cent compared to the second quarter of 2011.
UNB's net profit for the nine-month period ended September 30 was Dh1.37 billion, up 16.3 per cent compared to Dh1.18 billion in the same period last year.
The bank's operating profit for the same period was Dh1.68 billion, an increase of 14.6 per cent compared to Dh1.47 billion for the corresponding period in 2010.
"Amid the continuing global economic challenges and headwinds, the UNB Group has posted another set of solid results reflecting the underlying strengths of its core lines of businesses and the growing franchise.
"The high points during the quarter were further enhancement of already strong capitalisation levels, liquidity optimisation and satisfactory asset quality and loan loss coverage," said Mohammad Nasr Abdeen, Chief Executive Officer.
UNB's operating income for the nine-month period was Dh2.22 billion compared to Dh1.99 billion in the same period last year. Islamic financing was up by 21 per cent to Dh1.76 billion.
The increase in net interest income and net income from Islamic financing was achieved by an expansion in the net interest margin, increase in loans and advances and optimisation of liquidity levels.
"UNB has reported strong results 49 per cent above our forecast and 33 per cent above consensus, driven by a continued expansion of interest margins.
Net interest margin increased on a sharp cut in average deposit remuneration from 2.55 per cent in the second quarter of 2011 to 2.13 per cent in the third quarter of 2011," said Jaap Meijer, Head of Banks Research at HC Securities
The non-interest income for the period under discussion decreased by 14.9 per cent to Dh453.8 million from Dh533.5 million in the first nine months of last year, principally due a decrease in net fee and commission income which declined to Dh364.1 million from Dh421.1 million in the same period last year.
The drop in fee and commission income was mainly due to the implementation of the Central Bank of the UAE regulations regarding lending and other services offered to individual customers, the bank said in a statement.
The bank's loans and advances reached Dh55.7 billion as of September 30, up 2.5 per cent year-on-year. The customers' deposits were marginally lower by 0.7 per cent to Dh52.5 billion in the same period.
The advances to stable resources ratio, computed in accordance with the Central Bank of the UAE regulations continued to remain well within the regulatory requirements.
The credit to deposit ratio as of September 30 exceeded 100 per cent. The bank reported strong liquidity position of 16 per cent of its total asset as of September 30.
The ratio of non-performing loans to gross loans and advances increased slightly to 1.7 per cent as of September 30, with the loan loss coverage being 139.2 per cent compared to 127.9 per cent at the close of the third quarter in 2010.