Sharjah, UAE: United Arab Bank P.J.S.C (UAB) in a statement said that the bank’ transformation strategy implemented in H2 2015 continues to yield benefits. Aided by solid performance across Net-Interest Income, material cost savings from its streamlined operating model and a substantial reduction in Provisions for Credit Losses, the Bank generated a Net Profit of AED71m for the first half of 2016, versus a Net Loss of AED511m in H2 2015.
These positive results provide further support that the path UAB embarked on in the latter part of 2015 given the slowing economy and increase in problem loan formation, specifically in the small and medium-sized company segment, is suitable given the economic backdrop. With the objective to build a more efficient, lower risk and sustainable Bank, UAB is returning to its traditional ‘core’ corporate roots, complimented by focused Retail and Treasury propositions, whilst continuing to proactively deleverage from its ‘non-core’ higher risk portfolios in an economically rationale manner. This transition has enabled the Bank to comprehensively streamline its cost base, which will underpin delivery of sustainable returns going forward.
“The Board is pleased to see the improved operating performance continue into the second quarter, demonstrating the strength of our ‘core’ business. Although 2015 was a challenging year for UAB, when we look back I am increasingly confident it will be viewed as a defining period for the Bank,” Sheikh Faisal Bin Sultan Bin Salem Al Qassimi, Chairman of the Board of Directors, said.
“We continue to explore various options to accelerate the process of managing down the ‘non-core’ elements of our business so that the Bank’s performance converges with our ‘core’ segments within an optimal timeframe. Whilst the transformation strategy has delivered substantial changes to the size, shape and risk profile of the business, we realize the continued uncertainty in the macro-economic environment will require robust oversight of the Bank’s governance and control frameworks across 2016 and beyond to protect the long-term interests of our shareholders.”
“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’ business in addition to reduction in provisions and material cost savings. Non-Interest Income is up by 12% quarter on quarter due to increased focus on generating ancillary revenue streams, and our ‘core’ Customer Deposits grew by 3% against March 2016. Gross Loans remained in line with Q1 2016 despite a further 17% reduction in our ‘non-core’ in the second quarter,” Samer Tamimi, Acting Chief Executive Officer, said.
“Our Provisions are stable at Q1 2016 levels, however, H1 2016 has experienced a substantial reduction compared H2 2015. Looking further ahead, as UAB continues its transition to a lower risk model, these reductions will moderate further in the medium to long term.”
“Our strategy is on track, with both the Board and Management Team fully aware of the challenges the current economic climate presents. As we remain vigilant to the macro-economic changes and ensure we continue to enhance our enterprise risk management capabilities, our objective to build a lower risk, more efficient Bank is unchanged.”
