Finance House net profit reach Dh48m

Abu Dhabi: Finance House of Abu Dhabi said on Thursday its net profits dropped by 12 per cent (Dh6.9 million) for the first half of the year.

Mohammad Al Qubaisi, chairman of Finance House, told Gulf News that the bank's net profit for the first half of 2011 was Dh48 million compared to Dh54.9 million for the same period last year.

Al Qubaisi said that the drop in profits is attributed to lower interest rates on inter-bank placements in 2011. " This drop is mainly attributed to lower interest rates earned on inter-bank placements in 2011 compared to 2010. In addition, the interest rates on UAE dirham bank deposits have dropped more than 50 per cent compared to last year while our average placements with banks was higher in 2011 than 2010," Al Qubaisi said.

The company attributed subdued loan book growth to the conservative stand taken by the bank.

He stated that the bank had taken various measures to boost its profits for the second half of the year.

"We are stepping up our investments in top quality regional fixed income instruments with significantly better interest rate yields in comparison to bank deposits. We are taking appropriate steps to boost retail and commercial lending in the second half of the year," Al Qubaisi said.

Net interest income earned amounted to Dh57.2 million during the first half of the year compared to Dh59.2 million for the same period last year.

Al Qubaisi attributed the decline in interest income to a reduction in rates on inter bank placements, which stood at Dh654 million by the end of June 2011 compared to Dh591 million for the same period last year.

Marwan Shurrab, vice-president and chief trader at Gulf Mena Investments, told Gulf News that the drop in the profits by 12 per cent with distribution of cash dividends by 15 per cent is a positive sign for the strength of the bank, attributing the drop in profits to conservative policies by the bank.

"The drop is attributed to the market risk, and loans on one hand and to conservative policies adopted by the banks in terms of loans in the aftermath of the crisis during 2009 and 2010 for the banks on the other hand. The amount of loans has dropped due to banking policies to avoid risks," Shurrab said.

Net loans and advances to customers decreased marginally during this period as of June 30, 2011 by Dh0.06 billion, according to a statement issued by the bank. The statement added that the customers' deposits stood at Dh1.42 billion as of June 30, 2011.