UAB reports Dh166m net loss in 2015

Dubai: United Arab Bank (UAB) reported a net loss of Dh166 million for the full year 2015 compared to a net profit of Dh605 million in 2014.

The bank attributed dip in profits to provisions taken during the second half of the year and a general increase in costs.

For the year, the bank’s total income declined by 12 per cent to Dh1.2 billion compared to the previous year. UAB’s operating expenses for the year was Dh491 million with cost-to-income ratio increasing to 40.5 per cent in 2015 versus 28.7 per cent for 2014.

The bank’s non-performing loan ratio surged to of 4.01 per cent for 2015 compared to 2.56 per cent, but the bank continued to maintain strong coverage ratio of 124 per cent at the end of 2015.

Faced with the negative effects of a slowing economy, the bank revisited its direction during the fourth quarter to build a more efficient and sustainable bank, better focused on its historic strength of serving the UAE corporate market.

“Our ability to absorb significant provisions in 2015, whilst maintaining our capital base and strengthening funding and liquidity, underlines the strength of the bank,” said Shaikh Faisal Bin Sultan Bin Salem Al Qasimi, Chairman of the board of directors.

The bank said its strong funding, capital and liquidity fundamentals supported its transformation efforts to deleverage from its higher risk loan portfolio. As a result, UAB improved the quality of its loan portfolio and maintained its capital adequacy ratio at 14.7 per cent, with its funding and liquidity profiles further strengthening in the fourth quarter of 2015.

UAB continued to maintain robust liquidity with an advances-to-stable-resources ratio of 80.9 per cent and an eligible liquid asset ratio of 18.7 per cent, both above Central Bank thresholds.

“Our results were materially affected by the significant impact of provisions taken in the second half of 2015 following defaults predominantly in the SME [small and medium enterprises] segment. To improve financial stability, our first course of action was to deleverage from these higher risk portfolios, with significant efforts from our reinforced Credit Remedial Unit,” said Samer Tamimi, Acting Chief Executive Officer of UAB.

As part of the restructuring drive, the bank recently strengthened its senior management team by appointing a number of senior executives. The bank’s cost base has been overhauled and, from 2016 onwards, the bank intends to take actions to align both its headcount and branch network with its streamlined operating model.

“I am satisfied with the swift progress the team has achieved during the fourth quarter, with fourth provisions reducing by 38 per cent when compared to the third quarter. We expect our provisions to moderate considerably in the future,” said Tamimi.