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Higher impairment charges hit UAE banks Emirates NBD and ADCB

By Saeed Azhar
A man rides a bicycle past Emirates NBD head office in Dubai

By Saeed Azhar

DUBAI (Reuters) - Dubai's biggest lender Emirates NBD <ENBD.DU> reported a 15% drop in fourth-quarter earnings on Monday, below analysts' forecasts, on a jump in impairment charges, sending its shares down around 1%.

The bank booked impairment charges of 2.06 billion dirhams ($560.88 million) in the quarter, up more than three times from a year earlier due to higher bad debt charges as it consolidated results of newly acquired Turkish lender DenizBank.

Even without DenizBank, impairment charges were up 78% on lower writebacks and recoveries. The bank did not give details of these charges.

Banks in the United Arab Emirates (UAE) are bracing for more writedowns from the real sector amid a downturn, especially in the Dubai property market.

Fitch Ratings recently warned a weakening property market in the UAE was likely to put more pressure on the asset quality of the banking sector.

Emirates NBD reported a net profit of 2.02 billion dirhams in the fourth-quarter, down from 2.39 billion dirhams in the same period a year earlier. EFG Securities had projected a net profit of 2.45 billion dirhams.

Full year profit, however, surged 44%, underpinned by double-digit growth in net interest income, stronger loan growth and gains from the listing of the bank's unit Network International <NETW.L>.

Separately, Abu Dhabi Commercial Bank <ADCB.AD>, the UAE's third-biggest bank, also reported a 16% drop in fourth-quarter profit on Monday, hurt by an increase in impairment charges.

ADCB shares were trading 1.8% lower in early trade.

Emirates NBD said it expected the Expo 2020 world fair to support multiple sectors in Dubai, but a softening real estate market remained a risk for 2020.

(Reporting by Saeed Azhar and Davide Barbuscia, Editing by Sherry Jacob-Phillips and Mark Potter)