Dubai Islamic full-year net falls as impairments rise

11. February. 2010

Dubai Islamic Bank, the UAE’ biggest Islamic lender, said full-year profit declined as it set aside more money for bad loans.

Net income was AED1.2bn ($327m), the bank said in a statement to the Dubai bourse today. Dubai Islamic posted a profit of AED1.73bn a year earlier, according to Bloomberg data.

“This decline is primarily due to the conservative and prudent approach adopted by the bank” of enhancing impairment provisions, which rose 57 percent to 818 million dirhams, the statement said.
 
Fourth-quarter profit increased to 79.1 million dirhams from 1.44 million dirhams in the year-earlier period. Bloomberg calculated profit for the period by subtracting nine-month earnings from full-year income. The shares jumped as much as 12 percent to 2.6 dirhams, the most in almost two months.
 
The stock closed at 2.44 dirhams.

UAE banks are suffering after the financial crisis slowed lending, hurt investment-banking Emirates NBD, the U.A.E.’s biggest bank, said today it more than doubled provisions for bad loans as it posted a 9 percent drop in full-year income. Profit at National Bank of Abu Dhabi, the country’s second-biggest bank, fell 13 percent in the last quarter of 2009, while losses widened at Abu Dhabi Commercial Bank, because of loan provisions.

Local lenders are also being hurt by Dubai’s debt crisis and concern they may have to take additional provisions against potential losses as the second-largest sheikhdom in the U.A.E. seeks to renegotiate repayment terms on borrowings.

Dubai Islamic proposed a 20 percent cash dividend for 2009, according to the statement.
[Bloomberg]