BANKING Emirates NBD profit increases 16% to top analysts’ forecasts

Emirates NBD, Dubai’s biggest bank, posted a 16 per cent increase in third-quarter net profit, beating analyst estimates, as net interest income rose.

Net profit attributable to equity holders rose to Dh2.64 billion from a year earlier, the lender said yesterday in a filing to Dubai Financial Market, where its shares are listed.

The results beat the median profit estimate of Dh2.55bn of four analysts polled by Bloomberg.

Revenue in the third quarter rose 26 per cent to Dh4.4bn from a year earlier. Net interest income rose 18 per cent to Dh3.3bn.

“The operating performance ... was satisfying as all business segments delivered a year-onyear increase in both operating income and contribution to group profit,” said Surya Subramanian, the chief financial officer at the lender.

“Margins continued to improve as rate rises flowed through to loan book, which more than offset a rise in deposit costs.”

An improved performance is expected for banks across most of the GCC this year due to an uptick in the regional economy, analysts have said.

In March, Abdul Aziz Al Ghurair, chairman of the UAE Banks Federation, forecast loan growth of as much as 6 per cent on aggregate for banks in the UAE, compared to 4 per cent in 2017.

Non-interest margins improved 31 basis points year-onyear to 2.87 per cent “as rate rises flowed through to loan book which more than offset a rise in deposit costs on a change in deposit mix”, the bank said. Costs in the third quarter rose 15 per cent year-on-year to Dh1.5bn due to higher staff and IT costs in relation to the bank’s digital transformation and technology push.

“Costs were higher as a result of international branch expansion, VAT, advertising and Expo 2020 sponsorship,” the lender said.

Emirates NBD’s non-interest income fell 1 per cent year-onyear to Dh1.15bn due to lower income from investment securities. Provisions fell by 18 per cent year-on-year to Dh353 million.

“The bank reported strong performance across line items with NIM expansion, healthy balance sheet performance and lower provisioning,” said Chiro Ghosh, an analyst with Sico Bank in Bahrain.

“The only weak aspect was perhaps the surge in operating expense.”

Sico is forecasting Emirates NBD full-year earnings at Dh8.6bn, but the Dubai lender could well beat it.

Last year, Emirates NBD said it plans to invest Dh1 billion on digitising part of its operations over the course of the next three years.