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Union National Bank’s fourth-quarter profit rises 29%, missing forecasts

Union National Bank said its fourth-quarter profit increased by 29 per cent as money set aside to cover bad debt dropped and operating income rose.

Profit in the three months to the end of December came in at Dh251 million compared with Dh195m in the fourth quarter of 2015, the bank said.

Net impairment charges fell to Dh313m in the fourth quarter of 2016 versus Dh395m in the previous year, it said.

Operating income rose by 5 per cent to Dh905m versus Dh862m a year earlier.

“2016 was a challenging year which saw slowing credit growth and higher funding costs for GCC banks due to tighter liquidity conditions,” said Mohammad Nasr Abdeen, the bank’s chief executive.

“In the backdrop of tough market conditions, UNB has delivered consistent results driven by steady business growth and prudent risk and cost management.”

Still, Shabbir Malik, a Dubai-based banking analyst at the Egyptian investment bank EFG Hermes, said that the quarterly net profit came in below his expectation of Dh310m because of higher than expected provisioning.

The collapse in the price of oil starting in the summer of 2014 has reduced demand for loans and increased the level of debt defaults among UAE banks across the board.

The board has recommended a 20 per cent cash dividend subject to shareholder approval.