UNB reports Dh1.86b net profit, down 8% on higher impairments

Dubai: Union National Bank (UNB) on Monday reported a net profit of Dh1.86 billion for the year 2015, down 8 per cent compared to Dh2 billion reported in 201 4.

The bank’s net profit for the fourth quarter of the year was down 55 per cent to Dh195 million compared to Dh436 million reported in the same quarter last year.

The bank posted a modest increase of 6 per cent in operating profit at Dh2.69 billion in 2015 compared to 2014. The decline in profits is attributed to higher impairment charges mainly on the Commercial and SME (small and medium enterprises) portfolios.

“The global and regional economies saw considerable headwinds in 2015, with some sharp market movements for various asset classes, including commodities in the second half of the year. Against this backdrop of increased uncertainty and risk aversion, the Group has continued to grow its business in a controlled manner with total assets crossing the Dh100 billion asset mark for the first time ever in 2015,” said Mohammad Nasr Abdeen, Chief Executive Officer, Union National Bank.

The operating income for 2015 was Dh3.73 billion, up by per cent year on year. The net interest income and net income from Islamic financing for 2015 was up by 10 per cent mainly due to increase in average interest earning assets and improved net interest margin.

The non-interest income in 2015 was marginally lower by 3 per cent at Dh808 million. The decrease in non-interest income was principally due to lower fair value gain on investment properties of Dh3 million in 2015 compared to Dh67 million in the previous year.

The loans and advances increased by 7 per cent in 2015 to Dh68.4 billion. The investment portfolio of the group increased significantly by 27 per cent to Dh14.7 billion by the year end. Total assets of the group increased in 2015 by 9 per cent to Dh101.9 billion.

Liquid assets, including investments, constituted 28.4 per cent of the total assets as at December 31, 2015. Customers’ deposits recorded a healthy growth of 11 per cent in 2015 to Dh74.8 billion. The bank raised medium term funding of Dh2.8 billion during the fourth quarter to further diversify the funding mix.

While the loan to deposit ratio was at 91.4 per cent at year end 2015 the advances to stable resources ratio was at 84 per cent.

The bank said due to the elevated levels of delinquencies in the commercial and SME portfolios, the provision for credit losses increased in 2015. However, the ratio of non-performing loans and advances to gross loans and advances improved to 3.5 per cent in 2015 compared to 3.8 per cent in 2014 with loan loss coverage of 107.7 per cent at year end 2015.

The group continued to maintain strong capital adequacy ratios with the overall Basel II capital adequacy ratio at 19.4 per cent and the Tier I capital adequacy ratio of 18.3 per cent at yearend 2015.

“The group has a sound balance sheet, remains well capitalised and continues to support our clients with best in class product offerings and superior customer service,” said Abdeen.