Provisions eat into FGB’s revenues

Bank’s profits decrease 8% in first half, to Dh2.64b

First Gulf Bank (FGB), the Abu Dhabi-listed bank, reported yesterday Dh2.64 billion in net profit for the first half of 2016, marking an eight per cent decline compared to the Dh2.87 billion recorded in the same period in 2015.

The results put the bank’s net profit for the second quarter of this year at Dh1.31 billion — down 10 per cent on the Dh1.45 billion in same quarter in 2015.

“We are mindful of a range of global macroeconomic challenges affecting investor sentiment, including the UK’s decision to leave the European Union … As recently indicated by the International Monetary Fund, economic growth is projected to improve in the medium term as enhanced liquidity, a pickup in private investment, and stronger external demand restore investor confidence,” said Andre Sayegh, FGB’s chief executive officer.

He added he expected the bank to be able to capitalise on future opportunities both in the UAE and abroad.

Sayegh said the net profit in Q2 was good amid global operating challenges.

“These results were achieved on the back of an enhanced model across our businesses, geared to support higher profitability in the medium to long term, and create sustainable value for our shareholders,” he said.

FGB’s loans reached Dh153.8 billion at the end of June 2016, marking a three per cent yearon-year increase, while customer deposits remained flat year-on-year at Dh139.7 billion.

Operating income stood at Dh2.22 billion in the second quarter of 2016, down one per cent year-on-year, and at Dh4.37 billion in the first six months of 2016 — a three per cent year-on-year decline.

Much like other large banks in Abu Dhabi, FGB’s provisions and impairments jumped during the quarter to reach Dh398 million — up 54 per cent compared to Q2 2015, and stood at Dh774 million for H1 2016 — up 23 per cent.

The bank’s total assets rose four per cent to reach Dh227 billion by the end of June 2016.