UNB misses analyst estimates

|By TAP Staff| Union National Bank reported third-quarter profit that missed analyst estimates as impairment charges rose and fee and trading income declined.

Net income fell 12 percent to 480.6 million dirhams ($131 million), the Abu Dhabi-based bank said in a statement to the stock exchange on Sunday. Impairment charges jumped 57 percent to 199.8 million dirhams. Fee and commission income dropped 16 percent and the lender had a loss from currency and derivatives trading in the quarter versus a profit a year ago.

The increase in impairment charge is “due to higher provisions in the commercial business and increased provision coverage on the portfolio,” UNB said in a separate statement.

A near halving of oil prices over the past year is beginning to hurt growth in the U.A.E., the second-biggest Arab economy after Saudi Arabia, and may be leading to a rise in loan defaults. United Arab Bank PJSC, another U.A.E. lender, earlier this month reported a 272.6 million-dirham loss in the third quarter compared with a profit a year ago due to provisions made after an increase in loan defaults in “higher risk” commercial loans.

Commercial Bank International PSC also reported on Sunday a 28.6 million-dirham loss compared with 64.9 million-dirham profit a year ago. Impairment losses and provisions climbed 63 percent to 115.1 million dirhams.

Union National Bank’s loans grew 7 percent from a year ago to 69 billion dirhams and deposits surged 17 percent to 73.2 billion dirhams, according to the statement. Both Abu Dhabi and Dubai governments hold stakes in UNB.