Abu Dhabi Islamic Bank Q1 Net Profit Up 20.4%

Abu Dhabi Islamic Bank , the largest sharia-compliant lender in the emirate, met analysts’ expectations as it posted a 20.4 per cent rise in first-quarter net profit on Monday, with higher lending cited for the increase.

The lender, which said earlier this month it was buying much of Barclays’ retail operations in the United Arab Emirates, made a net profit of Dhs409.5 million ($111.5 million) in the three months to March 31. That was up from Dhs340.1 million in the prior-year period, it said in a bourse statement.

The results were in line with the average estimate of three analysts, who forecast profit of Dhs411 million in a Reuters poll.

ADIB said April 6 it would buy the retail business of the British lender for Dhs650 million, subject to regulatory approval, as Barclays became the latest foreign lender to exit the country’s highly-competitive consumer banking space as new capital rules make banks evaluate their global footprint.

ADIB attributed its profit hike in the first quarter to an 18.1 per cent year-on-year increase in lending, with total loans standing at Dhs63.8 billion at the end of March 2014.

Bank lending across the UAE banking system has been buoyant in recent months as the economy rebounds from a real estate crash and debt problems at a number of Dubai government-related entities – December saw the fastest lending growth in nearly four years, before dipping slightly in January, central bank data showed.

Over the same timeframe, deposits grew 21.4 per cent to Dhs77 billion.

The profit increase came despite a 16.7 per cent increase in credit provisions to Dhs216.4 million in the three months to March 31.

The fact the bank could grow its profits healthily while still maintaining a conservative stance towards provisioning showed the strength of the bank’s core business, chief executive officer Tirad Al Mahmoud said in the statement.