Emirates NBD earns Dh7.1b profit amid strong liquidity

BOARD OF DIRECTORS RECOMMEND INCREASE IN DIVIDEND TO 40 FILS FROM 35 FILS PER SHARE

Emirates NBD, the largest bank in the UAE by total income, net profit and branch network reported a net profit of Dh7.1 billion for the full year 2015, up 39 per cent over the previous year.

The strong performance was helped by income growth, a modest increase in costs and a lower impairment charge. The board of directors has recommended an increase in the 2015 dividend to 40 fils from 35 fils per share.

Total income for the year ended December 31, 2015 amounted to Dh15.22 billion, up by 5 per cent compared with Dh14.44 billion in 2014.

Net interest income for the year improved by 8 per cent to Dh10.24 billion. The improvement in net interest income is attributable to an improved asset mix due to growth of Islamic and retail assets and a lower cost of deposits helped by CASA growth.

Non-interest income grew 1 per cent in 2015 to Dh4.98 billion as core fee income growth was offset by lower gains from the sale of properties and investments. Core fee income improved 14 per cent year on year due to higher income from trade finance, foreign exchange and derivatives, alongside growing credit card volumes.

“During the year, and for the first time in the bank’s history, total assets crossed the $100 billion mark, total income exceeded Dh15 billion and net profit surpassed Dh7 billion, further reinforcing Emirates NBD’s position of leadership in the region. I am particularly pleased that Emirates NBD continued to achieve growth in revenue and net profit amid a challenging environment,” Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of Emirates NBD, said in a statement.

For the fourth quarter of the year the bank reported net profits of Dh2.13 billion up 74 per cent year and 28 per cent quarter on quarter. Net interest income improved 8 per cent year on year due to loan growth and 3 per cent quarter on quarter due to loan growth coupled with a slight widening in margins. Noninterest income improved 30 per cent year on year and 39 per cent quarter on quarter due to growth in core fee income coupled with some one-off gains from the sale of investments and other income.

Loans and deposits

For the full year, the bank’s loans increased by 10 per cent and deposits by 11 per cent. Despite a more challenging year for regional liquidity, the bank’s advances to deposits ratio improved to 94.2 per cent as a result of further growth in stable funding sources such as current account and savings account deposits. The bank issued Dh10.6 billion of term debt with most of this issued in the first half of 2015 when market conditions were receptive.

“We delivered strong growth in net profit, supported by an enhanced asset mix, a further improvement in credit quality and an improved cost of risk. Our prudent balance sheet management and strong ability to attract and retain both retail and corporate deposits have enabled us to improve the bank’s liquidity position despite a challenging year for regional liquidity,” said Group CEO, Shayne Nelson.

The bank’s balance sheet remains strong due to improvements in the credit quality and liquidity profile coupled with robust capital ratios. The impaired loan ratio improved to 7.1 per cent and the cost of risk declined for the sixth consecutive quarter whilst the impaired loan coverage ratio increased to 111.5 per cent. Costs for the year ended 31 December 2015 amounted to Dh4.7 million, an increase of 8 per cent over the previous year. This increase is attributed to higher staff costs linked with rising business s. The cost to income ratio increased marginally by 0.6 per cent to 31 per cent

During 2015, the impaired loan ratio improved by 0.8 per cent to 7.1 per cent. The impairment charge of Dh3.4 billion during the year was 32 per cent lower than in 2014. The cost of risk has fallen for the sixth consecutive quarter. Net provision includes more than Dh 2 billion of write-backs and recoveries which together helped boost the coverage ratio to 111.5 per cent. As at 31 December 2015, the bank’s capital adequacy and Tier 1 capital ratios were steady at 20.7 per cent and 18 per cent respectively.

Our prudent balance sheet management and strong ability to attract and retain both retail and corporate deposits have enabled us to improve the bank’s liquidity position despite a challenging year for regional liquidity.”

Shayne Nelson

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Group CEO, Emirates NBD