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Dubai: Leading UAE banks are reporting strong first-half profits defying the global trend and analysts' expectations.
In the beginning of this month Ahmad Humaid Al Tayer, chairman of Emirates NBD - the largest regional bank by assets - said that the UAE banks would report profits in the range of 30 to 45 per cent. So far, most leading UAE-based banks have reported profits in this range or more.
Banking industry analysts said the UAE banks' relatively low exposure to the US and Western markets and the strong performance of the regional economies supported by the high oil prices are helping them to beat expectations.
For the first half of the year, Emirates NBD reported Dh2.68 billion net profit, up 41 per cent compared to the combined first-half profits of Emirates Bank International (EBI) and National Bank of Dubai (NBD). "The local economy remains supportive of the growth we are experiencing. We expect the trend to continue," said Rick Pudner, CEO of Emirates NBD during a teleconference last week.
National Bank of Abu Dhabi (NBAD) reported net profits of Dhs1.87 billion for the first half of 2008, 58 per cent above the first half of 2007. Union National Bank's (UNB) net profit grew to Dh764.6 million in the first half of 2008, up against Dh542.4 million in the corresponding period, registering a growth of 41 per cent. "The outstanding first-half results reflect the strong performance of all the bank's businesses," Michael H. Tomalin, NBAD's chief executive said in a statement.
While the bigger banks such as Emirates NBD, NBAD and ADCB have reported strong growth in their wholesale lending, relatively smaller banks have also capitalised on lending opportunities to small and medium enterprises.
Rakbank's first-half net profit jumped 71 per cent to Dh311.6 billion compared to the same period last year. This was largely due to growth in the small business, commercial loans, mortgage finance and credit card portfolios.
According to Fitch Ratings, the UAE banking sector continues to benefit from a buoyant operating environment. "Given that performances rely on core banking activities, and in the light of continuous strong demand for credit, we expect banks to perform strongly in 2008," said Philip Smith, senior director in Fitch's Financial Institutions team in a recent report.
Results: DIB profit soars 47%
Dubai Islamic Bank (DIB) announced on Saturday that its net profit reached Dh1.30 billion in the first half of 2008, an increase of 47 per cent compared to Dh888 million for the corresponding period last year, excluding the gain on transfer of interest in a DIB subsidiary.
At the end of June this year, the bank's total assets stood at Dh91.4 billion, up 21 per cent compared to Dh75.5 billion at the end of the first half of 2007.
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