January 28, 2020 / 7:30 AM / in a month

UPDATE 1-First Abu Dhabi Bank reports rise in Q4 profit, and impairments

(Adds detail, background)

By Saeed Azhar

DUBAI, Jan 28 (Reuters) - First Abu Dhabi Bank, the biggest lender in the United Arab Emirates (UAE), reported a 5% rise in quarterly profit due to an increase in non-interest income, but like other rivals also saw a steep jump in impairment charges.

UAE lenders are seeing rising bad debt charges as they navigate a property downturn notably in Dubai, which has hit contractors and real estate firms.

Emirates NBD saw impairments rise more than three times, partly due to bad debt charges at its newly acquired Turkish unit, DenizBank, while similar charges climbed 48% at Abu Dhabi Commercial Bank.

Dubai house prices have fallen by at least a quarter since mid-2014, the peak from its recovery from the 2009 debt crisis, and the end of this latest bout of weakness is not yet near.

FAB’s fourth-quarter profit was 3.08 billion dirhams ($838.6 million), up from 2.93 billion dirhams, it said in a statement.

Arqaam Capital had a forecast of 3.0 billion dirhams, and EFG Hermes had projected 3.08 billion dirhams.

Net impairment charges were offset by a 34% rise in non-interest income, fueled by strong foreign exchange and investment income.

FAB said it had a cautious outlook for 2020 due to persistent market uncertainty.

Full-year net profit was 12.5 billion dirhams, up 4% from a year earlier, slightly above an estimate of 12.3 billion dirhams by analysts polled by Refintiv.

Loans and advances rose 16% year-on-year in 2019,

“We are starting off 2020 with a robust capital position, enabling us to support our future growth plans in the UAE and across strategic markets,” said Chairman FAB Sheikh Tahnoon Bin Zayed al-Nahyan in a statement.

FAB is in talks to potentially acquire the Egyptian subsidiary of Lebanon’s Bank Audi, Reuters reported on Jan. 22, citing two sources familiar with the matter.

Emirates NBD on Monday reported a 15% drop in quarterly net profit, while Abu Dhabi Commercial Bank reported a 16% drop in net profit. ($1 = 3.6728 UAE dirham) (Reporting by Saeed Azhar; Editing by Tom Hogue and Louise Heavens)

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