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Home » ADCB’s profit slumps after $292m impairments for NMC, Finablr – News

ADCB’s profit slumps after $292m impairments for NMC, Finablr – News

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ADCB was a major lender to NMC Health with an exposure of about $981 million to the company.

Abu Dhabi Commercial Bank (ADCB), UAE’s third-biggest lender, reported an 84 per cent fall in first-quarter net profit on Thursday as it took $292 million in impairments on debt exposure to troubled hospital operator NMC Health and payments group Finablr.

The bank also said the coronavirus outbreak had made the operating environment “increasingly challenging”, and as a result it was difficult to predict the financial impact for the rest of the year at this stage.

ADCB was a major lender to NMC Health with an exposure of about $981 million to the company, which went into administration after months of turmoil following questions about its financial reporting from short-seller Muddy Waters.

The bank also had an exposure of $182 million to payments group Finablr.

ADCB reported a net profit of Dh209 million ($57 million) for the three months ended March 31, compared to Dh1.3 billion a year earlier.

EFG Hermes had projected a net profit of Dh896 million dirhams.

ADCB said: “The higher expected credit losses were related to the current macro-economic challenges as well as to NMC Health Group, Finablr and associated companies, after the healthcare group revealed suspected fraudulent activity and previously undisclosed liabilities of over $4 billion.”

“We believe that the impairment allowances for this exceptional case are adequate based on currently available information.”

The bank’s impairment charges in the first quarter were up more than 150 per cent year-on-year, but up by 9 per cent excluding NMC and Finablr.

Last week, Reuters had reported that banks in the UAE with exposure to NMC risk having to make provisions for between 25 per cent to 50 per cent on more than $2 billion of outstanding debt to the company.

NMC, which has borrowed from a total of 80 local and international banks, disclosed $6.6 billion in debt last month, above $2.1 billion disclosed in June last year.

Click here to read more news from @khaleejtimes

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