United Arab Bank has attributed the improved first half results to the transformation strategy implemented in the first half of 2015
The bank has attributed the improved first half results to the transformation strategy implemented in the first half of 2015.
Dubai: United Arab Bank (UAB) on Monday reported a net profit of Dh71 million for the first half of 2016, versus a net loss of Dh511 million in the second half of last year.
The bank has attributed the improved first half results to the transformation strategy implemented in the first half of 2015. In addition, the bank also reported solid performance across net interest income, material cost savings from its streamlined operating model and a substantial reduction in provisions for credit losses.
“Although 2015 was a challenging year for UAB, when we look back I am increasingly confident it will be viewed as a defining period for the Bank. We continue to explore various options to accelerate the process of managing down the ‘non-core’ elements of our business so that the bank’s performance converges with our ‘core’ segments within an optimal timeframe,” said Shaikh Faisal Bin Sultan Bin Salem Al Qassimi, Chairman of the Board of Directors.
The bank’s loans and advanced declined to Dh14.88 billion as at June 30, 2016 compared to Dh15.67 billion reported in the same period in 2016. The bank said that in line with its ongoing deleveraging strategy, gross customer loans remained in line with the first quarter 2016 level despite a 17 per cent reduction in the ‘non-core’ portfolio. The bank reported 3 per cent uplift in ‘core’ customer deposits compared to first quarter.
Non-interest income of Dh68 million represents a 12 per cent uplift compared to prior quarter, although net interest income is 16 per cent lower due to the planned reduction across the bank’s higher risk ‘non-core’ portfolios.
“Our financial performance is aided by a significant progress within our ‘core’ business in addition to reduction in provisions and material cost savings. Non-interest income is up by 12 per cent quarter on quarter due to increased focus on generating ancillary revenue streams, and our ‘core’ customer deposits grew by 3 per cent against March 2016,” said Samer Tamimi, Acting Chief Executive Officer of UAB.
Provisions for credit losses in the second quarter of 2016 were Dh117 million, broadly in line with first quarter at Dh114 million and significantly lower compared to third quarter of 2015 at Dh466 million and Dh288 million in the fourth quarter of 2015.
“Our Provisions are stable at the first quarter 2016 levels, however, the first half 2016 has experienced a substantial reduction compared to second half of 2015. Looking further ahead, as UAB continues its transition to a lower risk model, these reductions will moderate further in the medium to long term,” said Tamimi.
UAB has maintained its non-performing loan ratio at 4.3 per cent by managing growth in its ‘core’ customer loans and continuing its strategy to deleverage ‘non-core’ portfolios. In the first 6 months of 2016 these ‘non-core’ portfolios have reduced by 34 per cent, whilst overall they have been managed down 52 per cent since September 30, 2015.
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