Emirates NBD robust in Q1
Profit rises 8% to Dh1.81b; income up 2% at Dh3.9b despite challenging market
Emirates NBD on Tuesday declared an eight per cent increase in its first quarter net profit on higher income and lower bad loans.
Dubai's largest lender said it made a net profit of Dh1.81 billion, or $492.8 million, in the first three months of 2016 compared to Dh1.67 billion in the corresponding period of 2015.
Analysts at EFG Hermes and Sico Bahrain had forecast the bank would make a net profit for the quarter of Dh1.87 billion and Dh1.93 billion respectively.
The healthy operating performance was helped by an increase in total income, driven by asset growth and stable core fee income, coupled with a control on expenses and lower provisions. Despite challenging market conditions, Emirates NBD continued to achieve growth in revenue and net profit as various parts of the business delivered a robust performance in the first quarter.
Total income for the first quarter grew by two per cent to Dh3.9 billion. Net interest income grew three per cent to Dh2.6 billion as loan growth more than offset a contraction in margins.
Non-interest income marginally declined by one per cent to Dh1.4 billion as core fee income held steady, bolstered by growth in credit card volumes, whilst income from property and investments declined due to lower one-off gains. The bank said its balance sheet remained strong in the first quarter. Credit quality improved as the impaired loan ratio advanced from 7.1 per cent to 6.9 per cent during the quarter whilst the impaired loan coverage ratio also strengthened to 113.5 per cent. The bank's advances to deposit ratio at 95.9 per cent remains comfortably within the management's target range.
"The group is well-positioned to utilise our strong franchise, capital and liquidity base to take advantage of opportunities within the region," said Hesham Abdulla Al Qassim, vice-chairman of Emirates NBD.
Group chief executive officer Shayne Nelson said: "Liquidity pressures in the sector continued to ease in the first quarter from the tight conditions experienced in the second half of 2015. Wholesale banking, global markets and treasury, and retail banking and wealth management units all delivered a solid first quarter. We remain cautiously optimistic for the remainder of 2016 but are conscious of the headwinds that a strong dollar and volatile oil price can present."
"The operating performance for the first quarter of 2016 improved, as demonstrated by the growth in both total income and net profit. We remain very much focused on controlling expenses and our structural liquidity remains sound. We were able to raise Dh2 billion of term funding through private placements at competitive pricing, despite challenging market conditions," said group chief financial officer Surya Subramanian.
The bank's retail banking and wealth management reported an operating income of Dh1.513 billion for the first quarter of 2016, up eight per cent from the previous year. Net interest income grew six per cent to Dh918 million while fee income rose 11 per cent to Dh595 million, led by growth in foreign exchange remittance, wealth management and the credit card business. Fee income now accounts for 39 per cent of total income.
Wholesale banking delivered a strong performance for the quarter ended March 31, 2016, with net profit of Dh705 million, up 41 per cent compared with net profit of Dh499 million for the quarter ended March 31, 2015, backed by continuing momentum in the core business and lower provisioning requirements due to improvement in the credit quality of the loan book.
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