Emirates NBD posts 15% rise in net profit to beat estimates

Emirates NBD, Dubai’s largest lender by assets, reported a 15 per cent rise in first-quarter net profit, driven by an increase in total income, higher lending and better margins.

Net profit in the first three months of the year increased to Dh2.7 billion, the lender said in a statement to the Dubai Financial Market, where its shares are traded. The bank’s results beat the average Dh2.5bn estimate of three analysts polled by Bloomberg.

Emirates NBD’s results are “underpinned by higher income on the back of loan growth, stable margins, and increased foreign exchange and derivative income”, said group chief executive Shayne Nelson. The lender’s “balance sheet remains strong with an improvement in liquidity and capital ratios and a stable credit quality”.

Total income increased 15 per cent year-on-year to Dh4.7bn, loans grew 3 per cent quarter-on-quarter, to Dh337.7bn, while customer deposits also rose 3 per cent to Dh359.4bn from the previous quarter. Total assets climbed 5 per cent to Dh525.8bn from the end of 2018.

Emirates NBD’s net interest margin improved by 15 basis points year-on-year to 2.83 per cent, helped by rate rises, it added. Core fee income increased 15 per cent year-on-year, and 9 per cent quarter-on-quarter on the back of higher income from forex and derivatives.

“Costs improved by 7 per cent from the previous quarter due to a reduction in staff costs, lower professional fees and marketing expenses,” said Surya Subramanian, Emirates NBD’s chief financial officer.

This year, the lender’s balance sheet will be further boosted by the acquisition of Turkey’s Denizbank, announced last year. Emirates NBD said earlier this month it revised the terms under which it will acquire 99.85 per cent of Denizbank based on depreciation in the value of the Turkish lira.

The value of the revised deal now stands at $2.75bn instead of $3.2bn agreed last May, saving the lender as much as $700 million following the lira’s value plunging and the deceleration of Turkey’s economy.

“We have revised, on favourable terms, the sale and purchase agreement relating to the acquisition of Denizbank,” Mr Nelson said. “We expect this transaction to complete by the end of the second quarter 2019, subject to obtaining the required regulatory approvals .”

The lender, which previously said it was spending Dh1bn on its digital transformation, will continue to upgrade its digital banking solutions.

“As we prepare for Expo 2020 Dubai, Emirates NBD will remain at the forefront of innovation with its efforts to simplify banking and deliver a technology-driven banking experience with a human touch,” Mr Nelson said.

In a separate statement the bank said Mr Subramanian was leaving Emirates NBD to return to his home in Singapore to “pursue family interests” after nearly nine years with the lender.

The lender’s balance sheet will be further boosted by the acquisition of Denizbank, saving $700m in a revised deal