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Abu Dhabi Commercial Bank returns to profit

Bank returns to profit; books provisions; Provisions in Q4 647 mln dhs vs 2.05 bln dhs in Q4 '09

January 25, 2011 4:14 by

Abu Dhabi Commercial Bank (ADCB) on Tuesday said it swung to a fourth quarter and yearly profit helped by higher net interest income, beating analysts forecasts.

The lender, one of the region’s most exposed banks to indebted conglomerate Dubai World, booked 1.06 billion dirhams ($287.3 million) in provisions against its exposure. It was one of two UAE banks on the coordinating committee that negotiated Dubai World’s $25 billion restructuring plan, agreed by lenders last September.

ADCB made a profit of 371 million dirhams in the three months to Dec 31, from a net loss of 1.24 billion dirhams in the same period last year, the bank said in a statement.

Analysts polled by Reuters had estimated an average fourth quarter loss of 70.84 million dirhams.

On the year, ADCB had profit of 391 million dirhams, compared with a loss of 513 million dirhams in 2009, it said on Tuesday.

Fourth quarter net impairment allowances stood at 647 million dirhams and totalled 3.287 billion dirhams for the year. Specific loan impairment provisions also included 554 million dirhams for a pair of troubled Saudi conglomerates.

“The difficult environment has understandably had an impact on the bank’s net profitability, as well as resulted in continued provisioning requirements,” ADCB Chairman Eissa al Suwaidi said in the statement.

Net interest income rose 21 percent quarter on quarter, and gained 12 percent on the year.

ADCB said loans rose 7 percent to 129.1 billion dirhams in 2010 while deposits gained 23 percent to 106.13 billion dirhams.

Shares in ADCB, halted pending the results, closed at 2.09 dirhams on Monday.

The bank raised $750 million from a Malaysian ringgit bond in August under the bank’s 3.5 billion ringgit medium-term programme which attracted strong demand.

ADCB has also sought to boost its deposits base by acquiring the UAE retail arm of UK lender Royal Bank of Scotland (RBS) for $100 million in June, giving the bank 15 percent market share in the UAE credit card market.

(Reporting by Stanley Carvalho; Editing by Amran Abocar)

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