Emirates NBD profit up 60%

Bank reaches historic milestone as total assets surpass $100 billion mark in Q1

Dubai - Emirates NBD, the largest bank in the UAE by total income and branch network, announced on Wednesday a 60 per cent jump in first quarter 2015 net profit to Dh1.7 billion.

The strong operating performance, beating analysts forecast, was helped by an increase in both net interest income and non-interest income coupled with stable costs and a lower impairment charge, the bank said in a statement.

The earnings growth is the steepest among the five banks that have reported so far in the UAE.

Total income for the first quarter grew by 15 per cent to Dh3.8 billion. Net interest income grew 11 per cent to Dh2.5 billion as asset growth was focused on higher margin Islamic and Retail products, while the bank’s funding profile improved thanks to growth in current and saving accounts.

Non-interest income grew 23 per cent to Dh1.4 billion helped by a significant property disposal, increased income from foreign exchange and derivatives and growth in the asset management and credit card business.

The bank said it expects loan growth to be around five per cent in 2015. Loan growth climbed by four per cent in the first quarter of the year, up from the same period of last year, the bank said in its first-quarter earnings statement, released earlier in the day. 

Emirates NBD said its balance sheet strengthened thanks to an improvement in the liquidity and credit quality ratios. “The bank issued over Dh5 billion of term debt which boosted structural liquidity in first quarter. The Impaired Loan ratio improved further during the quarter from 7.9 per cent to 7.8 per cent as the bank actively managed its existing stock of impaired loans while the Impaired Loan Coverage ratio strengthened to 103.9 per cent. Capital ratios reduced slightly in first quarter as the annual dividend payment more than offset retained profit in the quarter.”

The bank has been helped by an easing of debt woes. In the fourth-quarter 2014, profit surged 82 per cent helped by its reclassification of its Dubai World debt as performing. Impairment allowances reached Dh1.1 billion at the end of the quarter, an improvement of 14 percent from the same period of last year.  

Hesham Abdulla Al Qassim, vice-chairman, Emirates NBD, said for the first time in the bank’s history, total assets have surpassed the $100 billion mark. “The balance sheet also strengthened during this period, with further improvements in both funding profile and asset quality. The group is well positioned to utilise our strong franchise, capital and liquidity base and to take advantage of opportunities within the region.”

Group chief executive officer, Shayne Nelson, said the bank had delivered another strong set of financial results with a net profit of Dh1.671 billion. “This is driven by higher income, stable expenses and lower provisions. Emirates Islamic delivered a very strong first quarter, recording impressive growth in both income and assets. We remain cautiously optimistic for the remainder of 2015 but are conscious of the headwinds that a strong dollar and low oil price can present.”

Group chief financial officer, Surya Subramanian, said the operating performance for the first quarter of 2015 improved, as demonstrated by the growth in both the total income and net profit. “We continue to diversify our sources of revenue and fee income as a proportion of total income grew to 32.9 per cent in first quarter, compared with 29.7 per cent in the same 2014 period. Costs actually fell quarter-on-quarter and, despite competitive pressures, margins were stable helped by a change in asset mix and improving funding base.”

Both loans and deposits increased by one per cent during the quarter. The advances to deposits ratio was stable at 95.6 per cent. During the quarter the bank prudently increased the amount of term funding issued by Dh3.6 billion, said the statement.

The bank’s capital adequacy ratio and Tier 1 capital ratios were 20.5 per cent and 17.5 per cent respectively.

The Retail Banking and Wealth Management division reported a total income of Dh1.402 billion, an increase of one per cent. The retail business has grown but revenues remained stable due to a change in internal transfer pricing adjustments.

“Our asset business had a strong quarter led by robust bookings in auto and personal loans, while the cards business continued to grow market share. We have also expanded our flagship remittance service DirectRemit, which offers instant funds transfer to partner banks in India, Philippines and Pakistan,” the bank said. Emirates NBD Private Banking showed significant growth, mainly from Non-Funded Income, and performed particularly well in its International locations. Emirates NBD Asset Management grew its assets under management to over Dh11 billion, further consolidating its position as a leading asset manager in the UAE. Wholesale banking operating income rose by nine per cent to Dh1.246 billion.

“We remain cautiously optimistic for the remainder of 2015 but are conscious of the headwinds that a strong dollar and low oil price can present,” it said. - issacjohn@khaleejtimes.com