Earnings up 7% Y-o-Y, top estimates. ADIB reported a net profit of AED482 million for 1Q16, +1.0% Q-o-Q and +7.1% Y-o-Y. Earnings were above our AED446 million estimate and consensus of AED453 million.   Our view of the results: Earnings surprised positively as provisioning was lower-than-expected and as investment income doubled Y-o-Y. FX income came in weaker-than-expected likely due to the impact of the devaluation of EGP on ADIB’s associate ADIB Egypt. Management kept loan growth under control ( -0.1% Q-o-Q and +7% Y-o-Y) as it remains concerned about the macro and to ease pressure on the bank’s core capital, which in our view is stretched. Liquidity remains the bank’s key strength as its LDR stood at 82% as of 1Q16 (the sector was at 95% as of Feb 2016). We have a Neutral rating on the stock.   Main Positives: i) Liquid balance sheet (LDR eases to 82% from 83% in 4Q15); ii) Lower-than-expected provisioning; and iii) Spreads likely to have been stable Q-o-Q. Main Negatives: i) Slight deterioration in NPL ratio (3.4% from 3.3% in 4Q15); ii) FX loss due to ADIB Egypt. (Shabbir Malik, Company disclosure)   Abu Dhabi Islamic Bank: AED4.40 as of 20 April 2016, Rating: Neutral, FV: AED4.20 per share, MCap: USD3,798 million, ADIB UH / ADIB.AD