Abu Dhabi Islamic Bank (ADIB) yesterday posted a 10.5% rise in second-quarter net profit, beating analysts’ estimates, as fee income boosted revenues.
Banks in the UAE are seeking to expand their income from sources other than interest as tough competition squeezes profit margins in the lending market.
Abu Dhabi’s largest Shariah-complaint bank, ADIB made a net profit of 502.6mn dirhams ($136.8mn) in the quarter ending June 30, compared with 454.8mn dirhams in the same period a year ago, it said in a statement.
Three analysts polled by Reuters this month forecast an average net profit of 484.23mn dirhams.
ADIB’s group revenues in the second quarter touched 1.25bn dirhams, up 15.8% over the prior-year period. Fee income rose 19.7% year-on-year, the statement said without giving actual figures.
ADIB said corporate finance, investment banking, transaction services, treasury and retail all contributed to higher fee income.
Customer financing, or loans, grew to 77.3bn dirhams at the end of the second quarter, up 13% over the same period a year ago while customer deposits jumped 13% to 89.1bn dirhams over the same period.
The bank booked provisions of 175.1mn dirhams in second quarter, slightly lower than that booked a year ago.
ADIB, which failed in its bid to win Citigroup’s Egypt retail business, is targeting acquisitions in 2016 in Asia, the Middle East and North Africa, its CEO said this month.
Shareholders of the bank have approved plans to raise 504mn dirhams of share capital through a rights issue, the bank said in late June.
The bank also won shareholder approval to raise the bank’s authorisation for issuing sukuk that will boost its Tier 1 or core capital to $3bn from the current limit of $2bn.