Profit stable Q-o-Q, meets expectations. ADIB reported a net profit of AED509mn, +0.3% Q-o-Q and +1.2% Y-o-Y. The bank’s earnings came in line with our expectation of AED495mn.   Our view of the results:  ADIB’s earnings came in-line with expectation as strong operating income was balanced by higher provisioning. The bank’s cost of risk increased to 130bps from 114bps in 2Q16 as the NPL ratio rose to 3.5% from 3.2% in 2Q16. Management stated that the credit quality remains negative for a number of segments.  ADIB kept operating costs under control (-4% Q-o-Q, 0% Y-o-Y) which led to an improvement in cost efficiency – cost to income improved to 43% from 46% a year ago). Loan growth continues to be sluggish (-1% Q-o-Q and 2% Y-o-Y) as the bank tightened its credit underwriting standards and as it focuses on preserving capital (CET 1 ratio is relatively stretched at 9%).   Main Positives: Above-sector-average liquidity (LDR: 80%); Stable spreads; Good cost control (-4% Q-o-Q, 0% Y-o-Y). Main Negatives: Sluggish loan growth (-1% Q-o-Q, +2% Y-o-Y); Higher-than-expected provisioning; Higher NPL ratio (3.5% versus 3.2% in 2Q16) (Shabbir Malik, Company)   Abu Dhabi Islamic Bank: AED3.51 as of 24 October, Rating: Neutral, FV: AED4.30/share, MCap: USD3,030mn, ADIB UH / ADIB.AD