Dubai: Continuing the growth trends in the banking sector from last year, all leading banks that announced their first quarter results so far, reported strong growth in assets and profits with consistent improvement in asset quality.
The strong resilience of the UAE economy to the sharp decline in oil prices and strength of Dubai’s diversified economy is seen supporting the banking sector performance, while the regional banking sector is seen facing pressures on both loans and deposits growth.
Among the top tier banks in the country, Emirates NBD reported the strongest growth in first quarter profits.
The bank’s net profits for the first three months of the year were up 60 per cent year on year to Dh1.7 billion. Total income for the first quarter grew by 15 per cent to Dh3.8 billion. Net interest income grew 11 per cent to Dh2.5 billion.
Despite the robust performance in the first quarter the bank’s management said it is fully aware of the challenges ahead. “We remain cautiously optimistic for the remainder of 2015 but are conscious of the headwinds that a strong dollar and low oil price can present,” said Shayne Nelson Group Chief Executive Officer of Emirates NBD.
Following the fall in oil prices, the bank adjusted its 2015 UAE growth forecast down to 4.3 per cent from 4.8 per cent. Emirates NBD’s forecast for Dubai’s growth in 2015 is 4.7 per cent.
Dubai Islamic Bank (DIB), the first among the UAE banks to report first quarter results posted net profit of Dh850 million, up 34 per cent compared with Dh637 million for the same period in 2014.
DIB’s total income increased to Dh1.77 billion, up 19 per cent compared with Dh1.49 billion for the same period in 2014. Net operating revenue increased to Dh1.56 billion, up 20 per cent compared with Dh1.3 billion for the same period in 2014.
“Expanding our financing book at two to three times the market has been achieved through a multi-pronged approach combining product innovation, technology, renewed sales and service focus and optimisation of balance sheet to create additional growth capacity,” said Dubai Islamic Bank Chief Executive Officer, Dr Adnan Chilwan.
Expectations
Abu Dhabi Commercial Bank (ADCB) reported Dh1.24 billon net profits for the first quarter of 2015, up 13 per cent compared to the same quarter last year. The bank’s net interest and Islamic financing income grew 19 per cent to Dh1.64 billion and non-interest income grew by 6 per cent to Dh551 million in the first quarter of 2015.
“The bank’s net interest income for the first quarter of 2015 beat our estimate by a whopping 14 per cent while non-interest income was higher than our expectations due to higher than anticipated investment income,” said Naveed Ahmed, Senior Manager Research Group at Global Investment House.
Abu Dhabi based First Gulf Bank (FGB) posted a net profit of Dh1.41 billion for the first quarter of 2015, up 7 per cent compared to the same period in 2014.
Although the bank faced a marginal decline in net interest and Islamic financing income, it was largely offset by the continued strength of non-interest income.
“Our non-interest income continued to grow, reaching 32 per cent of total revenues against 29 per cent last year, which is a great achievement in line with our plans to diversify revenue sources,” said André Sayegh, CEO of FGB.
Mashreq reported Dh651 million net profit for the first quarter of 2015, up 13.2 per cent compared to the same quarter last year. Net interest income at Dh804 million was up by 17.2 per cent compared to a year earlier.
“Our results reflect the continued stability of the UAE economy in the face of the disruption in the oil market. The banking industry and Mashreq in particular has displayed a remarkable immunity to the resultant economic turmoil in the region,” said Mashreq’s CEO, Abdul Aziz Al Ghurair.
Commercial Bank of Dubai’s (CBD) net profit for the first quarter of 2015 increased by 3.6 per cent to Dh295 million. Operating income for the quarter was 9.7 per cent higher at Dh581.1 million, largely driven by a strong growth of 13.1 per cent in loans and advances. “CBD continued to report positive growth in profit on the back of collaborative efforts from all lines of our business, which further diversified our revenue,” said Peter Baltussen, Chief Executive Officer of CBD.
