Q2 profit for National Bank of Abu Dhabi plunges 9.3 pct

Tuesday saw National Bank of Abu Dhabi (NBAD) - the biggest United Arab Emirates bank by market value - reporting a 9.3 percent decline in quarterly profits because of an increase in provisions.

According to an NBAD statement, the bank had a net profit of 907 million dirhams ($246.9 million) in the second quarter, compared to 1 billion dirhams in the same period last year.

Earlier, analysts had predicted the Q2 net profits to reach 726.4 million dirhams.

A hit against bad loans was taken by the bank, while the profits topped forecasts. NBAD was compelled to enhance its provisions, along with other banks in the region, against the backdrop of an economic downturn.

NBAD confirmed that a sum of 500 million dirhams was taken by it in provisions in the first half of 2009 - though it did not offer a quarterly breakdown - from 145 million dirhams in the same period in 2008.

Raj Madha, a Dubai-based analyst at EFG Hermes said: "Results are strongly ahead of expectations at the operating profit line, and with provisioning more or less as expected; this has driven a very strong bottom line number."

Via a statement, NBAD said a sum of $7.5 million is held by it in exposure to Ahmad Hamad Algosaibi & Bros and a $3.4-million exposure to a Saad Group sukuk, or Islamic bond.

It further added that a 10 percent share buyback, which is still subject to regulatory approval, has been approved by the bank's board.