Net profit down 18% Y-o-Y, misses consensus and our estimate. ADCB reported net profit of AED1,020 million (EPS: AED0.18) for 1Q16, down 14% Q-o-Q and 18% Y-o-Y. The bank’s earnings missed our estimate of AED1,130 million and consensus of AED1,180 million.     Our view of the results: ADCB’s earnings missed our expectations owing to higher-than-expected provisioning. The bank’s NPL ratio rose to 3.4% in 1Q16 from 3.0% in 4Q15 as non-performing loans grew 15% Q-o-Q. ADCB’s cost of risk climbed to 91bps from 25bps in 4Q15. Provisioning in the corporate banking segment rose to AED232 million from a recovery of AED36 million in 1Q15 and recovery of AED43 million in 4Q15. Spreads however widened Q-o-Q on account of higher yield on assets. Loan growth continues to be decent, while deposit growth outpaced loan growth and improved liquidity.   Main positives: i) wider spreads (+10bps Q-o-Q to 2.79%); ii) decent loan growth (+1.9% Q-o-Q and +11.0% Y-o-Y); and iii) strong FX income (+14% Q-o-Q, +88% Y-o-Y)   Main negatives: i) Higher-than-expected provisioning (cost of risk climbed to 91bps from 25bps in 4Q15); and ii) credit quality metrics deteriorate (NPL ratio rose to 3.4% from 3.0% in 4Q15; NPL coverage decreased to 112% from 129% in 4Q15) (Shabbir Malik, Company disclosure)