Union National Bank said its profit for the first three months of the year jumped 20 per cent to a quarterly record, beating analysts' estimates.
Net income increased to Dh615 million from Dh512m in the same period the previous year, boosted by non-interest income and investments, the bank said. Non-interest income – money made from activities apart from loans – gained 37 per cent to Dh228m from Dh166m in the same period last year while the bank’s investments jumped 50 per cent to Dh14.4m in the same time frame.
“The UNB Group witnessed all-round improvement in its various business lines, which led to the group posting a record quarterly profit,” said Mohammad Nasr Abdeen, the chief executive at UNB. “The group has consistently been investing in its infrastructure, distribution network and business enhancing initiatives, which has ensured the group’s performance has remained strong.”
The first quarter income beat the consensus of analysts polled by Bloomberg by 11 per cent, prompting the investment bank Shuaa Capital to maintain its “buy” recommendation on the lender’s stock.
Like many of its peers, including Mashreq and Dubai Islamic Bank, the Abu Dhabi lender has managed to come out of the crash in the price of oil with its profitability intact as the nation’s economy becomes less reliant on hydrocarbon exports.
Last year, the UAE economy is estimated to have grown more than 4 per cent, even after the price of oil fell more than 50 per cent during the second half. As a result of the drop, many economists, including those at HSBC and Standard Chartered, have lowered their growth forecasts for Arabian Gulf countries this year.
Over the weekend, the IMF also cut its projections for the UAE’s growth this year to 3.2 per cent – a decrease of 0.3 percentage points against its January forecast.
The slump in oil prices, which dropped 10 per cent in the first quarter, has made it more urgent for banks to entice individuals to take on debt as many corporations that rely on hydrocarbons to fuel their business will suffer a slowdown this year.
The UAE is the eighth-largest producer of oil in the world and the federal government relies on it for more than 60 per cent of its budget.
mkassem@thenational.ae
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