Net profit down 5.1% Q-o-Q, cash dividend AED0.24/share. ADIB reported a net profit of AED477 million for 4Q2015, down 5.1% Q-o-Q but up 16.4% Y-o-Y. The bank’s earnings beat our expectation of AED410 million (consensus AED413 million) mainly due to stronger-than-expected revenue. ADIB’s board proposed a cash dividend of AED0.2427/share ( pay-out: c40%), slightly higher than our estimate of AED0.23/share.   Our view of the results: ADIB’s net profit beat our estimate driven by stronger-than-expected fee and commission income, which rose 12% Q-o-Q and 10% Y-o-Y. Loan growth was relatively moderate at 1.5% Q-o-Q and 7.4% Y-o-Y, as the bank pursued new underwriting cautiously on concerns around liquidity and credit stress and to preserve ADIB’s relatively low capital base (CAR: ADIB – 15.1%; sector:  of 18.3%). Provisioning rose 29% Q-o-Q and 40% Y-o-Y, reflecting the upwards trend seen by other UAE banks this quarter, likely due to asset quality pressure in the SME and the retail banking segment. ADIB’s credit quality metrics however improved with the NPL ratio easing to 3.3% from 3.7% in 3Q2015 and NPL coverage crossing 110% from 98% in 3Q2015. Furthermore, ADIB’s general provision reserve at 2.3% of risk weighted is well above the central bank’s minimum of 1.5%. ADIB trades at 2015 P/BV of c1.4x. We have a Neutral rating on the stock.   Main Positives: i) Spreads likely to have widened; ii) Strong deposit growth (+5.1% Q-o-Q and +11.9% Y-o-Y); and iii) Solid fee income growth (+12.0% Q-o-Q and +10.0% Y-o-Y). Main Negatives: Higher provisioning (+29.2% Q-o-Q and +39.5% Y-o-Y). (Company, Shabbir Malik)