Emirates NBD earnings up 24% but costs grow
ASSET GROWTH AND HIGHER MARGINS SUPPORTED EARNINGS
Emirates NBD yesterday reported Dh7.65 billion in net profit for the first nine months of 2018, up 24 per cent compared to the same period last year.
For the third quarter, the bank reported a net profit of Dh2.63 billion, up 16 per cent compared to the Dh2.27 billion reported in the same period in 2017.
The increase in net profit was driven by asset growth, higher margins and reduced provisions, which helped offset an increase in operating costs.
Net interest income increased 19 per cent year-onyear due to loan growth coupled with an improvement in margins.
“Emirates NBD delivered a strong nine-month net profit underpinned by higher net interest income on the back of loan growth coupled with an improvement in margins,” said Shayne Nelson, group chief executive officer of Emirates NBD.
Total income for the first nine months amounted to Dh12.9 billion, an increase of 13 per cent compared with Dh11.42 billion from the same period a year ago.
Net interest income improved 19 per cent to Dh9.53 billion due to loan growth and an improvement in margins.
For the third quarter, noninterest income grew 4 per cent quarter-on-quarter but declined 1 per cent year-onyear due to lower income from investment securities in the second quarter as a result of an impairment provision on a private equity fund holding.
Costs for first nine months amounted to Dh4.11 billion, an increase of 17 per cent year-onyear on higher staff and IT costs relating to the bank’s digital transformation and technology refresh.
Costs were also higher as a result of international branch expansion, value-added tax (VAT), advertising and Expo 2020 Dubai sponsorship. The cost-to-income ratio, at 31.9 per cent, remained within 2018 guidance of 33 per cent.
“The operating performance for the third quarter of 2018 was satisfying as all business segments delivered a year-onyear increase in both operating income and contribution to group profit. Margins continued to improve as rate rises flowed through to loan book, which more than offset a rise in deposit costs,” said Surya Subramanian, group chief financial officer.
The impaired loan ratio improved to 5.8 per cent during the first nine months of 2018.
The Dh1.1 billion impairment charge during this period is a 35 per cent improvement on the corresponding period in 2017 and equates to an annualised net cost of risk of 55 basis points (bps).
Loans and deposits increased by 7 per cent and 4 per cent respectively from the beginning of the year.