- National Bank of Abu Dhabi's 4Q net income misses estimates
- Profit declines to 1.04 billion dirhams from 1.37 billion
Net income fell to 1.04 billion dirhams ($280 million) from 1.37 billion dirhams a year earlier, the state-controlled lender said in a statement Wednesday. The bank was expected to post profit of 1.24 billion dirhams, the mean estimate of 4 analysts in a survey compiled by Bloomberg. Revenue was 2.56 billion dirhams, compared with 2.76 billion dirhams. The board also approved a $2 billion medium-term note program.
Banks in the U.A.E. are prepared for deteriorating conditions as oil prices remain lower for longer, leading to a decline in government spending, slower economic growth and falling asset quality, Standard & Poor’s said Jan. 11. NBAD Chief Executive Officer Alex Thursby said earlier this month that the bank is focusing on generating revenue from international operations, capital markets and its domestic mortgage business instead of conventional lending this year as it grapples with the liquidity squeeze.
“There is no question that the market is in a new normal,” Thursby said on a conference call with reporters on Wednesday. “We’ve got to get used to that.”
Oil’s slump is forcing countries from Saudi Arabia to the U.A.E. to draw down reserves to maintain spending, draining billions from the banking system. Thursby said in October that the U.A.E.’s banking sector has lost 56 billion dirhams ($15.25 billion) in government deposits since September 2014, of which National Bank of Abu Dhabi’s share was about 48 billion dirhams. While withdrawals continued in the fourth quarter of 2015, Thursby said on Wednesday that outflows have stabilized in the last few months.
The bank expects its cost of risk to increase slightly in 2016, with ratio of non-performing loans standing 3 percent and provision coverage to be between 100-110 percent.