The Commercial Bank of Dubai (CBD) yesterday announced a second-quarter drop in profits of about 10 per cent due to provisions for bad loans, as it became the first major UAE bank to report results for the three months. CBD, the emirate's fourth-largest lender by market value, announced profits of Dh268 million (US$72.9m), down from Dh298.81m in the second quarter of last year. The bank's profits for the first half of this year to June 30 were also down, slipping 11.3 per cent compared with the first half of last year. "In the present economic circumstances the bank's operating results in the first six months have been solid, in spite of lower growth compared to previous years," said Peter Baltussen, the bank's chief executive. The bank said it had taken "additional provisions totalling Dh75m in the first half of 2009", a sign that it is preparing its balance sheet for a possible increase in loan defaults because of the financial crisis. Many banks have taken similar measures recently, setting aside cash that would otherwise have been reported as profits as a buffer against future losses. CBD said its ratio of non-performing loans to total loans stood at 1.1 per cent and its capital adequacy ratio, a key measure of the bank's financial soundness, was 13 per cent, above the Central Bank's minimum of 10 per cent. The bank's total assets were Dh36.5 billion at the end of the second quarter, a 6.4 per cent increase from the previous year. Loans and advances rose by 13.8 per cent and customer deposits grew by 9.2 per cent. The bank also said it had no exposure to two troubled Saudi Arabian conglomerates, the Saad and Al Gosaibi groups. Both firms are undergoing huge debt restructurings and many banks across the region, including Abu Dhabi Commercial Bank, Mashreqbank, First Gulf Bank and Union National Bank, have admitted they are owed money by the groups. All of those banks have said their exposures are manageable but analysts are watching results for signs that they are making provisions to account for them. "[The banks] will definitely have to reflect this in their year-end results," Sultan al Suwaidi, the Central Bank Governor, told Bloomberg yesterday, adding there would be "total disclosure" of UAE banks' exposures to the two Saudi conglomerates. Two smaller UAE banks - the United Arab Bank, based in Sharjah, and Invest Bank - also reported second-quarter results Wednesday. United Arab Bank recorded a Dh67.9m profit, up 2.3 per cent from the second quarter of last year. Invest Bank said profits increased 18 per cent to Dh92.6m compared with the same period last year. Second-quarter bank results across the region have only begun to trickle in and so far have been mixed. The Commercial Bank of Qatar yesterday posted a 45 per cent drop in profits from the second quarter last year. SABB, a Saudi bank, said its second-quarter profit dropped 15 per cent from the same period last year, slightly better than analysts' expectations. Other results have been more positive. On Tuesday, Al Rajhi Bank, the largest Saudi lender by market value, said its second-quarter profit this year was up 1.7 per cent from last year, well above expectations. Samba Financial Group, the -second-largest Saudi bank, reported a 1.6 per cent rise in second-quarter profits, beating average analyst expectations of a 9.1 per cent decline. afitch@thenational.ae