Higher provisions dampen UAE banking shares

CLOSING BELL: Shares of banks decline on fear of provisioning in the fourth quarter.

Concerns that fourth quarter bank earnings across Abu Dhabi and Dubai maybe hit by higher provisions led to a subdued day's trading on the bourses.

First Gulf Bank, Abu Dhabi's third biggest lender by assets, fell 2.1 per cent to Dh18.10.

The bank announced on Sunday that its board had recommended the distribution of 75 million shares after the expiration of its buyback programme as bonus stock to its shareholders. Abu Dhabi Commercial Bank lost 0.4 per cent to Dh2.26 a share. Abu Dhabi Islamic Bank lost 0.6 per cent to Dh3.02.

In December, the central bank of the UAE ordered banks to increase provisions incurred from exposure of the Saad Group and Ahmed Hamad al Gosaibi and Brothers to 80 per cent by the end of the year, from 50 per cent.

"The issues are still not over, nothing is clear yet," said Amied Kanaan, the general manager at Al Jazira Financial Services in Dubai. "Investors are still worried about the economy in general, nobody is confident at the moment. We are all thinking about debts, defaults, and restructuring," he said.

Property stocks also fell after The National reported on Sunday that rents in Abu Dhabi fell as much as 16 per cent in the last three months. Losses were led by RAK Properties, which dropped 4.2 per cent to 45 fils a share. Aldar Properties lost 2 per cent to Dh2.40. The Abu Dhabi Securities Exchange General Index lost 0.3 per cent to 2754.73.

In Dubai, Emaar Properties, which holds the largest weighting on Dubai's main measure, lost half a per cent to Dh3.51 a share. EmiratesNBD, Dubai's biggest lender, lost 2 per cent to Dh2.94. The Dubai Financial Market General Index declined 0.4 per cent to 1658.69

Elsewhere in the region, Kuwait's measure declined by 0.2 per cent to 6946.90. Bahrain's measure remained unchanged at 1428.70. Oman's index lost 0.4 per cent to 6916.95. Qatar's measure lost 0.2 per cent to 8993.63. The Saudi Tadawul All-Share Index lost 0.2 per cent to 6704.52.