Abu Dhabi banks beat profit estimates

Abu Dhabi lenders First Gulf Bank (FGB) and Abu Dhabi Islamic Bank (ADIB) beat forecasts with second-quarter net profits yesterday, underscoring a strong reporting season for lenders in the UAE.

Both registered strong growth in income from fees and commissions, reflecting an improved environment for business as the region’s economy picks up.

FGB, the second-largest lender by market value in the UAE, reported profit of 1.17bn dirhams ($318.5mn), up 15% from the corresponding period in 2012, the company said in an e-mailed statement.

Seven analysts polled by Reuters had estimated an average quarterly profit of 1.085bn dirhams.

Abu Dhabi Islamic Bank said net profit was 371.4mn dirhams, compared with 322.6mn a year ago, also beating forecasts. Two analysts polled by Reuters had predicted a 370mn and 301mn.

Banks in the UAE were expected to report strong second-quarter earnings thanks to an economic recovery in key sectors, primarily real estate, and lower provisions as the Gulf state recovers from debt troubles at Dubai’s state-linked entities.

On Monday, Emirates NBD beat estimates with a 50% hike in net profit, while National Bank of Abu Dhabi on Tuesday missed expectations but still increased profit by 15.8%.

Net profit at FGB was boosted by a 9% increase in net interest and Islamic financing income, and a 34% jump in fees and commissions.

For ADIB, fee and commissions - up 40.4% year-on-year also supported earnings and loan growth was also strong.

Loans and advances at the end of the June were 9.8% higher than the end of 2012. Over the same period, lending growth at FGB was 7%.

Tirad Mahmoud, CEO of ADIB, said the strong asset growth in the opening half of this year meant the bank has a “moderately positive” outlook for the rest of the year, although global economic volatility remained a potential risk.

For FGB, expansion into Asia in the coming quarters was a key focus for the bank, its CEO André Sayegh said.

Last month, the bank bought the credit card business of investment firm Dubai Group for $164mn to expand its customer base in the UAE.

Halkbank

Turkey’s Halkbank posted a net profit of 715.1mn lira ($376mn) for the second quarter, a rise of just under 1% on a year earlier and beating a Reuters poll forecast of 670.1mn.

Halkbank, the first Turkish lender to report second quarter figures, said its net profit in the first six months of the year stood at 1.43bn lira.

Turkish bank earnings are expected to have been boosted by strong loan demand in the second quarter, but analysts forecast the profit trend could turn negative through the rest of the year as underlying interest rates rise.

Turkey sold a 24% stake in Halkbank in a 4.5bn lira secondary offering (SPO) in November, the country’s biggest ever share sale.

Ezz Steel

Egypt’s largest steel maker Ezz Steel said it was seeing a recovery after a difficult two years, adding that it had secured funding for future investments.

It posted a net profit of 202mn Egyptian pounds ($28.9mn) for the first quarter of 2013, up from 18mn pounds a year earlier.

Net sales increased to 5.6bn pounds in the first three months of 2013 from 5.2bn pounds in 2012 after sales volumes and selling prices rose, Ezz said.

“Following two very difficult years in Egypt and in the global steel industry, the results ... represent a turning point for Ezz Steel,” said chairman and managing director Paul Chekaiban.

“Not only have all the operational indicators turned positive, but, more importantly, we have secured the financing for the restart of our investment plan.”

The company said it had succeeded in deferring 220mn pounds in principal payments originally scheduled for 2013 by one year. The payments were related to a 440mn pound bond that matures in 2014.

It also said it had signed a 550mn pound, six-year loan with a number of Egyptian banks to finance completion of a new factory, bringing its total outstanding syndicated loan to 2.8bn pounds.