Dunia Finance profit falls despite rising income from commissions

Dunia Finance, the Abu Dhabi lender, said that its profit fell by 67.2 per cent last year compared with 2015 amid an economic slowdown that has led to an increase in bad debt among banks and financial institutions across the board.

That drop in profitability came even as the company’s net interest income and fees and commissions rose.

Net profit fell to Dh71.3 million last year from Dh217.4m a year earlier, the company said. A company spokesman said that money set aside to cover bad debt had risen in 2016 without disclosing figures. Net interest income rose by 3 per cent to Dh562.7m in 2016 versus Dh546.3m in 2015. Net fee and commission income advanced 37.9 per cent to Dh244m compared with Dh176.9m, it said.

“Our ability to confidently navigate the uncertainties of 2016 highlights the resilience of our unique customer-centric business model and the robustness of our operations, demonstrating that Dunia can grow and succeed in even the most of the challenging times,” said Rajeev Kakar, its managing director and chief executive.

Dubai Finance focuses on mass consumer and small business segments, providing loans, credit cards and payroll services.

UAE banks and financial institutions that lend have not had the best of times in recent years. Deposits have dwindled as government-related entities have withdrawn funds to plug growing budget deficits.

While the fall in the price of oil, which has been reversing since November, led to an increase in borrowing by governments to reduce those deficits, it has softened demand for loans among local corporations and increased the level of debt defaults. Among the hardest hit have been small and medium-sized businesses.

Mubadala, an investment company of the Abu Dhabi Government, and Temasek Holdings, Singapore’s sovereign wealth fund, are said to be among the shareholders looking to sell their stakes in Dunia Finance.

Mubadala and Temasek respectively hold 31 per cent and 40 per cent stakes in Dunia, according to Waha Capital, which holds 25 per cent.

mkassem@thenational.ae

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