Dubai

Union National Bank (UNB) reported on Tuesday a 4.7 per cent increase in its net profit for 2017, reaching Dh1.66 billion from Dh1.58 billion in 2016 as non-interest income climbed.

The figure brings net profit for the fourth quarter of 2017 alone at Dh289 million, a 15 per cent spike from the Dh251 million recorded in the same quarter of 2016.

In a statement, UNB’s board of directors recommended cash dividends of 20 per cent, which would amount to Dh0.20 per share.

Mohammad Nasr Abdeen, chief executive officer of UNB, said the earnings came amid an improvement in global economic outlook.

“The group’s focus has been to further expand its franchise, selectively pursue growth with emphasis on fee-related business and prudent risk management,” he said in a statement.

“The group expanded its presence both domestically and internationally, with the opening of new branches in the UAE and Egypt as also establishing a commercial branch in the People’s Republic of China, the first ever from a UAE-based bank.”

The increase in profits was supported by a 15 per cent jump in non-interest income, which reached Dh984 million in 2017, mainly due to an increase in fees and commission income due to higher business volumes in retail banking. The increase in non-interest income was also driven by gains on dealing in foreign currencies and derivatives.

Impairment charges, however, were also on the rise during the year to reach Dh794 million in 2017, a 13 per cent jump, as the ratio of non-performing loans rose to 4.3 per cent from 3.4 per cent. UNB said the increase in non-performing loans ratio was due to an increase in the impaired portfolio in certain segments.

The bank said is “proactively identifying problem loans and taking necessary measures to protect the interests of the group.”

Impairment costs in the fourth quarter alone were Dh308, 2 per cent lower than the Dh313 million in the same quarter of 2016.

Meanwhile, operating expenses were flat year-on-year at Dh1.13 billion in 2017.

On the balance sheet side, loans and advances by the bank fell 4 per cent year-on-year in 2017, with UNB’s management attributing that to “certain loan repayments in [the] wholesale banking segment and overall softer credit demand.” Loans amounted to Dh71.1 billion by the end of 2017.

Customer deposits inched up 2 per cent during the year to Dh78.7 billion.