Union National Bank Q3 profit falls 15%
ABU DHABI: Union National Bank, 50 percent owned by the Abu Dhabi government, yesterday posted a 15 percent drop in third-quarter net profit, missing analysts’ forecasts as interest income fell. It was the sixth successive quarter of weaker earnings, squeezed by government spending cuts in the United Arab Emirates and tighter liquidity due to lower oil prices.
The fifth largest lender in the emirate by assets reported a net profit of 410 million dirhams ($110 million) in the three months to Sept. 30, compared to 483 million dirhams in the same period a year ago. Net profit attributable to equity holders in the third quarter was 406.64 million dirhams versus 480.59 million dirhams in the prior-year period, according to a bourse statement. The average forecast of three analysts polled by Reuters had been for a quarterly profit of 456.7 million dirhams. Net interest income and income from Islamic financing in the quarter ending Sept. 30 fell 13 percent year-on-year to 667.20 million dirhams.
Net interest income was squeezed by the higher costs of deposits and also bad loans from the small and mediumsized enterprise portfolio, the bank said. Loans and advances reached 73.6 billion dirhams for the nine month period ending September 2016, up 7 percent from the same period of last year. Customer deposits edged up 2 percent to 74.8 billion dirhams over the same time frame.
Earlier this month, UNB sold a $600 million, five-year international bond at 170bp over mid-swaps.