DUBAI: Abu Dhabi Commercial Bank (ADCB) , UAE’s third-biggest lender, reported a jump in second-quarter net profit on Sunday and said it was optimistic about the turnaround of troubled hospital operator NMC, to which it was heavily exposed.
Net profit between April and June amounted to 1.4 billion dirhams ($381.22 million), a 14 percent increase year on year and a 25 percent increase quarter on quarter.
“The growth in net profit is a result of the increase in a diversified revenue stream, disciplined cost control and a prudent approach to risk management”, Chairman Khaldoon Al Mubarak said in a statement.
ADCB posted a 25 percent drop in net profit last year as it booked significantly higher provisions for NMC, which went into administration last year after months of turmoil following questions over its financial reporting and the discovery of undisclosed debt.
ADCB had nearly $1 billion in lending exposure to the group, which is set to soon obtain creditor approval for a reorganisation of the business.
“The bank is confident that the provisions it has recorded for NMC are
sufficient and appropriate,” CEO Ala’a Eraiqat said.
ADCB was among a group of lenders which last year provided a $325 million facility to fund NMC’s administration and pave the way for restructuring.
Partly because of that facility, which gave creditors a super senior status, the bank said it was well positioned to maximise recoveries.
ADCB’s non-performing loan ratio improved to 5.86 percent in the second quarter from 6.53 percent in the first three months of this year, but was 70
basis points higher year on year. Impairment charges of 678 million dirhams in the second quarter were 1 percent higher year on year and 4 percent lower quarter on quarter, it said.
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