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ADIB Net Profit Down by 30 Per Cent in Second Quarter

ABU DHABI — The consolidated net profits of Abu Dhabi Islamic Bank, or ADIB, fell 29.8 per cent to Dh193.4 million in second quarter of the year from Dh275.7 million in the corresponding period last year, as the property subsidiary of the lender booked losses.

However, the core banking operations showed good results as increased revenues and strong margins boosted the net profits by 48.8 per cent to Dh214 million in the second quarter of 2009.

In the second quarter, the bank took additional credit loss provisions of Dh171.4 million to increase the total provisions to Dh836 million versus Dh589.3 million on December 31, 2008. Provisions now cover 2.2 per cent of the gross customer financing portfolio. “Despite the major credit loss provisions and drop in real estate Investment Income of Dh147.7 million, profitability has remained strong in the second quarter,” Tirad Mahmoud, Chief Executive Officer of the capital based lender, said in a statement on Wednesday. The strong performance of banking activities provided a 32 per cent increase in net profit against the first half of 
last year.

Explaining the reason for increasing credit loss provisions, the CEO said that the credit environment remains weak and in the rest of this year situation is expected to remain challenging with further provisioning necessary.

In early 2008, the chief executive officer said that ADIB started making provisions in the light of the deepening economic downturn. While there are now some signs of recovery the bank will continue with conservative approach, he said.

ADIB will maintain the prudent policy to take proactive provisions against the credit risk portfolio as circumstances require over the second half of the year, 
he said.

Burooj, the real estate arm of the bank couldn’t contribute to the profitability of ADIB, as the property market is hit by fall in prices. — haseebhaider@khaleejtimes.com