World Economy

Small Arab Banks Pay Heavy Price

Small Arab Banks Pay Heavy PriceSmall Arab Banks Pay Heavy Price

Middle East’s smaller banks, by asset size, were in general impacted more by a surge in provisions for bad loans with a few exceptions, according to the full-year bank results.

National Bank of Fujairah was one notable exception. The bank reported a net profit of Dh558.8 million ($152 million), up 10.5% compared with Dh505.4 million in 2014. The bank’s operating income grew 18.3% and operating profit was up 20.2% to Dh766.9 million, compared with Dh637.8 million in 2014, Arabian Business reported.

Mashreq maintained net profits of Dh2.4 billion for 2015, the same level as in the previous year, although for the fourth quarter of the year, the bank’s net profit declined 13.7% to Dh556.2 million compared with Dh644.3 million in the same quarter of last year.

“The bank has maintained a steady performance in the difficult market conditions, proving once again that being prepared is half the battle won. As many others in the industry, we read the signs of the market softening early and took decisions to moderate our growth strategy accordingly,” said Mashreq’s CEO, Abdul Aziz Al Ghurair.

Rakbank Group’s net profits for the year were down by Dh49.3 million to Dh1.4 billion. Provisions for loan impairments increased by Dh460.1 million over last year due to higher loan provisioning in unsecured lending portfolios. The bank’s non-performing loans to gross loans and advances ratio closed at 3.2% compared with 2.4% at the end of the previous year.

Commercial Bank of Dubai’s net profit for 2015 was 11.3% lower at Dh1.066 billion compared with Dh1.202 billion for last year as net impairment charges increased by Dh143 million. Union National Bank reported a net profit of Dh1.86 billion for the year 2015, down 8% compared with Dh2 billion reported in 2014. The bank’s net profit for the fourth quarter of the year was down 55% to Dh195 million compared with Dh436 million reported in the same quarter last year.

United Arab Bank and Commercial Bank International suffered net losses as both institutions made substantial provisions.

UAB reported a net loss of Dh166 million for the full year 2015 compared to a net profit of Dh605 million in 2014.

Commercial Bank International reported a net loss of Dh467 million for the full year 2015 from a sharp increase in provisions to Dh840 million as the bank cleaned a huge chunk of legacy-impaired assets and NPLs from its balance sheet.