(MENAFNEditorial)
H1 2017 Highlights
AED55m Net Profit in H1 2017 50% Y-o-Y reduction in Impairment Losses ‘Non-Core' portfolio managed down to 3% of Total Loans Robust liquidity profile with UAB comfortably above regulatory requirements Loan : Deposit Ratio managed to 97% Capital Adequacy stable at 13%
Sharjah, UAE, 17July 2017: United Arab Bank P.J.S.C ('UAB' or 'the Bank) announces its Financial Results for the six months ended 30th June 2017.
UAB continues to record tangible progress against its Transformation Strategy set out in H2 2015 to become a safer, stronger and sustainable Bank. Solid performance is evidenced across H1 2017 with the Bank reporting a Net Profit of AED55m, with UAB continuing to: strengthen its core businesses; run-down ‘non-core' higher risk portfolios; streamlined the cost base; and maintained key banking fundamentals.
This transformation has enabled UAB to comprehensively streamline its activities which will underpin the delivery of sustainable returns going forward.
Sheikh Faisal Bin Sultan Bin Salem Al Qassimi, Chairman of the Board of Directors, said, 'The Board is pleased to see the improved operating performance continue into the second quarter of 2017 demonstrating the strength of our ‘core' business.
Whilst the transformation strategy has delivered substantial changes to the size, shape and risk profile of the Bank, we realize the continued uncertainty in the macro-economic environment will require robust oversight of the Bank's governance and control frameworks across 2017 and beyond to protect the long-term interests of our shareholders.
Samer Tamimi, Acting Chief Executive Officer, commented, 'These positive results provide further tangible evidence that our revised strategy is appropriate given the economic environment. I am pleased to report that our financial performance is aided by a significant progress within our ‘core' activities with the Bank recording a 6% Q-on-Q uplift in Net Interest Income, whilst Operating Expenses continue to be robustly managed.
Financial Review
UAB reported a Net Profit for the six months to 30th June 2017 of AED55m, primarily driven by growth in Non-Interest Income and material reduction provision charges following a transition to a lower risk business model.
Customer Loans across the Banks ‘core' Corporate and Retail Units delivered an increase for the third consecutive quarter, whilst in parallel the ‘non-core' portfolio continued on its downward trajectory with further contraction of 33% recorded in H1 2017 and now represent 3% of the total loan base. The Bank will continue to recycle risk weighted assets released from the deleveraged ‘non-core' portfolios to support growth of ‘core' activities, whilst ensuring UAB captures all available cross-sales opportunities.
Operating Expenses for H1 2017 were AED174m, representing a 13% reduction against H2 2016 as the Bank continues to capture the benefits of the comprehensive review and subsequent overhaul of its cost base completed as part of the wider transformation strategy. In 2016 this resulted in a 24% Y-o-Y reduction with the Management Team confident that further ‘double digit' savings will be delivered in 2017 aided in part by the ongoing branch rationalization program.
Going forward the Bank remains committed to ensuring the business is supported by an efficient operating model and will continue to invest in its people, processes, systems and other critical infrastructure. Our primary objectives remain unchanged: to leverage capabilities; improve efficiencies; and eliminate non-essential expenditure.
OUTLOOK
Mr. Tamimi concluded, 'Our strategy remains on track, with both the Board and Management Team remaining vigilant and ensure we continue to enhance our enterprise risk management capabilities in line with our ultimate objective to build a lower risk, more efficient and sustainable Bank.
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