UNB profits rise 4% to Dh958m in first half

Dubai

Abu Dhabi-based Union National Bank (UNB) reported on Wednesday Dh958 million in profits for the first half of 2017, marking a nearly 4 per cent increase compared to the Dh922 million recorded in the same half last year.

The figures put profit for the second quarter of this year at Dh506.3 million, up 7.2 per cent compared to the second quarter of 2016.

Mohammad Abdeen, UNB’s chief executive officer, attributed the growth to “higher business volumes, prudent risk management, and sound cost management.” He said the bank continued being “selective in booking new business.”

The increase in profits came despite a rise in impairment charges UNB paid on financial assets, and despite a jump in operating expenses.

In the second quarter of the year, UNB’s operating expenses rose 21 per cent to reach Dh316 million. Expenses in the first half of 2017 were Dh582 million, up 11 per cent year-on-year.

In the first half of 2017, the bank’s impairments also jumped 30 per cent year-on-year to reach Dh258 million. Impairments in the second quarter of the year alone were Dh90 million, 21 per cent lower than the Dh114 million recorded during the second quarter of 2016.

The jump in impairment costs in the first half of the year follows a trend of higher impairments over 2016 as banks grappled with a rise in bad loans from both corporate and retail consumers amid slower economic growth.

UNB said the ratio of non-performing loans and advances to gross loans and advances was 3.9 per cent as of June 30, 2017, with loans loss coverage being 95.8 per cent.

On the balance sheet side, UNB recorded a 3 per cent increase in loans and advances, which stood at Dh72 billion at June 30, 2017. In its management report, UNB described demand for loans as “soft.”

“Compared to the previous year-end (December 31, 2016), there was a slight reduction in the net loans and advances as the group saw certain prepayments, and demand for new credit remained soft,” the report said.

Customer deposits also fell 1 per cent to reach Dh72.9 billion at the end of the second quarter compared to Dh73.3 billion at June 30, 2016.

The bank’s total assets were unchanged at Dh102.6 billion at the end of the first half of 2017, but were 1 per cent lower compared to the Dh103.9 billion on December 31, 2016.