Union National Bank Second-Quarter Profit Increases 25%, Missing Estimates
Union National Bank PJSC, in which Abu Dhabi and Dubai own stakes, reported a less-than-expected 25 percent rise in second-quarter profit as higher impairment charges offset a rise in revenue.
Net income advanced to 340 million dirhams ($93 million) from 271.3 million dirhams, the Abu Dhabi-based bank said in an e-mailed statement today. Profit fell short of the mean estimate of 369.3 million dirhams in a Bloomberg survey of six analysts.
The result reflects the bank’s “prudent approach” and has helped “strengthen its financial position in the prevailing prolonged challenging economic cycle,” UNB said.
United Arab Emirates’ banks are recovering from the global credit crisis, which weakened lending and investment banking, while provisions for bad loans are rising amid the economic slowdown. U.A.E. economic growth may accelerate to 3.2 percent in 2010 with oil prices at $85 a barrel from 1.3 percent in 2009, Economy Minister Sultan Bin Saeed al-Mansouri said in May.
First-half net-interest income rose 22.4 percent from a year earlier to 946.7 million dirhams and non-interest income 41 percent to 341.4 million dirhams, UNB said. Lending rose 8.1 percent in June from a year earlier.
UNB booked an impairment charge of 216.5 million dirhams as a “pre-emptive measure” compared with 113.7 million dirhams a year earlier, according to the bank. The ratio of nonperforming loans to total loans declined to 1.4 percent at the end of June from 1.5 percent in December, UNB said.
Emirates NBD PJSC, the U.A.E.’s biggest bank by assets, reported July 26 a worse-than-expected 53 percent decline in second-quarter profit to 398.2 million dirhams as it set aside money to cover bad loans including for money lent to state-owned Dubai World. National Bank of Abu Dhabi PJSC, the second-biggest bank, said July 27 quarterly earnings rose 10.4 percent to 1 billion dirhams, ahead of analysts’ estimates.