DUBAI (Reuters) - Abu Dhabi Commercial Bank (ADCB), UAE's third-biggest lender, reported a more than 400% surge in first-quarter profit on Sunday, after it took big impairments a year earlier due to its large exposure to troubled hospital operator NMC Health.
Net profit in January-March this year totalled 1.1 billion dirhams ($299.50 million), a 436% increase year on year and an 11% increase quarter on quarter, ADCB said.
The growth was "largely due to improved cost of risk compared to Q1 '20," Chief Executive Ala'a Eraiqat said in the earnings statement.
In the first three months of 2020 ADCB reported an 84% fall in net profit as it took $292 million in impairments on debt exposure to NMC Health and payments group Finablr, which ran into financial difficulties last year.
The bank was a major lender to NMC Health with an exposure of about $981 million. NMC last year went into administration after months of turmoil following questions about its financial reporting from short-seller Muddy Waters.
"To date, the Bank has recorded significant provisions and interest in suspense on the NMC Group," ADCB said on Sunday.
"ADCB is comfortable with these provisioning levels, which are in line with independent assessments on value and recoverability and are consistent with information on potential recoveries disclosed to creditors by NMC," it said.
Net impairment charges totalled 704 million dirhams in the first quarter of this year, a 63% annual decrease and a 25% decline quarter on quarter.
The bank's net interest income was 2.1 billion dirhams in the first quarter, 24% lower year on year and 10% lower quarter on quarter, due to low interest rates and subdued economic conditions, it said.
($1 = 3.6728 UAE dirham)
(Reporting by Davide Barbuscia; Editing by Susan Fenton)