Dubai: Union National Bank (UNB) on Tuesday reported a 7 per cent year-on-year increase in its net profit for the third quarter of 2018 as impairment charges fell.
The bank’s profits stood at Dh438 million in the quarter, bringing net profit in the first nine months of 2018 to Dh1.28 billion, a 7 per cent decline over the Dh1.37 billion recorded in the same nine months of 2017.
The growth in profits in the third quarter came even as operating expenses rose by 11 per cent year-on-year, while non-interest income fell by 31 per cent, and operating profit was down 13 per cent.
Non-interest income in the first nine months of 2018 was 28 per cent lower year-on-year, at Dh557 million. UNB said this was due to a reduction in fees and commission income, lower gains on dealing in foreign currencies and derivatives, as well as a decrease in other income.
Impairment charges, however, more than halved, falling to Dh107 million in the quarter, compared to Dh227 million in the third quarter of last year. Net interest income and Islamic financing income also inched up 3 per cent year-on-year in the third quarter.
“The group has followed a strategy of measured growth, which has resulted in an increase in business volumes and related revenues during the third quarter, while other financial indicators remained strong, with a robust balance sheet, a sound liquidity position, solid capital ratios, and improving margins,” said Mohammad Nasr Abdeen, UNB’s chief executive officer.
In its management report, UNB also there were no updates on its talks about a potential merger with Abu Dhabi Commercial Bank. The two announced in September they had entered “exploratory talks” about possibly merging.
“At this time, there is no certainty that these negotiations will result in a transaction,” UNB said on Tuesday, adding that it will update the market “if and when there are any material developments.”
In terms of its balance sheet, loans and advances by UNB fell 3 per cent year-on-year to Dh69.2 billion while deposits were down 2 per cent to Dh73 billion at the end of September 2018.
UNB said the decline in loans was due to scheduled loan repayments and the bank’s “conservative positioning.” The ratio of non-performing loans fell to 3.7 per cent at the end of September, compared to 4.3 per cent at the end of 2017.