UAB back in the black with Dh45m profit
Lender’s streamlined model results in lower provisions and higher non-interest income
United Arab Bank (UAB) yesterday reported a net profit of Dh45 million for the first quarter of 2016, coming back from a net loss of Dh238 million in the fourth quarter of 2015.
The bank said its transformation strategy implemented in the second half of 2015 is progressing ahead of plan and the lender is back in black, aided by a substantial reduction in provisions, an uplift in non-interest income and cost savings from its streamlined operating model.
The positive results follow on from UAB revisiting its strategy in the latter part of 2015, given the slowing economy and an increase in problem-loan formation, specifically in the small-to-medium-sized enterprises (SME) segment.
“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,” said Shaikh Faisal Bin Sultan Bin Salem Al Qasimi, chairman of the board of directors. “These results represent a promising start on our path to rebuilding trust with our key stakeholders.”
Significant progress
The bank made significant progress in containing provisions for credit losses in the first quarter of 2016.
Provisions for the first quarter 2016 were at Dh114 million, a significant reduction compared to Dh466 million in the third quarter of 2015 and Dh288 million in the fourth quarter of 2015, respectively.
“Although our provisions have declined significantly quarter-on-quarter, UAB’s transition to a lower risk model will see these moderate further in the medium term,” said Samer Tamimi, acting CEO of UAB.
The bank’s total income of Dh249 million represents a 16 per cent uplift compared to the prior quarter, with non-interest income growing about 400 per cent in the same period.
UAB recorded solid performance in both its fees & commissions, and foreign exchange income, up 190 per cent.