Dubai: United Arab Bank (UAB) on Thursday reported Dh55.14 million net profit for the six months of 2017, down 22 per cent form Dh70.76 million reported in the first half of last year.

For the second quarter of 2017, the bank posted a net profit of Dh27.31 million, up 6 per cent to from Dh25.7 million reported in the same quarter last year.

UAB continues to record tangible progress against its transformation strategy set out in the second half of 2015 to become a safer, stronger and sustainable bank.

“Whilst the transformation strategy has delivered substantial changes to the size, shape and risk profile of the bank, we realise the continued uncertainty in the macroeconomic environment will require robust oversight of the bank’s governance and control frameworks across 2017 and beyond to protect the long-term interests of our shareholders,” Shaikh Faisal Bin Sultan Bin Salem Al Qasimi, Chairman of the Board of Directors of UAB, said in a statement.

Customer loans across the banks “core” corporate and retail units delivered an increase for the third consecutive quarter, whilst in parallel the “non-core” portfolio continued on its downward trajectory with further contraction of 33 per cent recorded in the first half of 2017 and now represent 3 per cent of the total loan base. With the rebalancing of portfolios, the loan growth was flat during the first half of 2017.

Operating expenses for the first half of 2017 were Dh174 million, representing a 13 per cent reduction against the second half of 2016 as the bank continues to capture the benefits of the comprehensive review and subsequent overhaul of its cost base completed as part of the wider transformation strategy.

Tangible evidence

The active cost management strategy resulted in a 24 per cent year on year reduction in costs last year. The management team is confident that further “double-digit” savings will be delivered in 2017 aided in part by the ongoing branch rationalisation programme.

“These positive results provide further tangible evidence that our revised strategy is appropriate given the economic environment. I am pleased to report that our financial performance is aided by a significant progress within our ‘core’ activities with the bank recording a 6 per cent quarter on quarter uplift in net interest income, whilst operating expenses continue to be robustly managed,” said Samer Tamimi, Acting Chief Executive Officer of UAB.

At the close of the first half of 2017, the bank reported robust liquidity profile comfortably above regulatory requirements with loans to deposit ratio at 97 per cent. Capital adequacy remained stable at 13 per cent.

Going forward the bank said it remains committed to ensuring the business is supported by an efficient operating model and will continue to invest in its people, processes, systems and other critical infrastructure.

“Our strategy remains on track, with both the Board and Management Team remaining vigilant and ensure we continue to enhance our enterprise risk management capabilities in line with our ultimate objective to build a lower risk, more efficient and sustainable Bank,” Tamimi said.