Dubai: Abu Dhabi-based Union National Bank reported on Thursday flat profitability year-on-year for the third quarter of 2017, with net profits stable at Dh410 million as credit growth remained muted in the UAE.

The figure brings profits for the first nine months of 2017 to Dh1.37 billion — up 3 per cent over the Dh1.33 billion recorded in the same period in 2016. The bank attributed the marginal increase to increased business momentum in consumer banking and “ongoing cost management.”

The flat performance in the third quarter came despite an 18 per cent year-on-year jump in impairment costs, which reached Dh227 million in the past quarter. Impairment charges were Dh486 million in the first nine months of 2017, marking a 25 per cent year-on-year spike.

In its analysis report, UNB said it recognised additional provisions in the quarters “in line with the group’s prudent approach to managing credit risks.” The higher impairment charges came as the ratio of non-performing loans to gross loans rose to 4.2 per cent from 3.7 per cent in the first nine months of this year.

Impairment charges at banks in the UAE have been on the rise over the past year amid slower economic growth and tighter liquidity, which are resulting in slower loan growth and higher rates of non-performing loans.

“As credit growth locally remains muted, the group is managing its lending on selective basis and continues to diversify its revenue streams by growing the fee-related business during the year,” said Mohammad Abdeen, UNB’s chief executive officer.

In the first nine months of 2017, the bank’s loans and advances reached Dh71.5 billion, down 3 per cent year-on-year due to softer credit demand, while customer deposits reached Dh74.3 billion, a 1 per cent year-on-year decline.

Meanwhile, non-interest income rose 9 per cent year-on-year in the third quarter to reach Dh257 million on the back of “an increase in fees and commission income driven by higher business volumes in consumer banking business and higher gain on dealing in foreign currencies and derivatives,” the bank’s report said.

UNB is the second UAE-based bank to report its results for the third quarter, after Dubai Islamic Bank reported earlier this week a 10 per cent jump in its net profit for the first nine months of 2017.