Emirates NBD PJSC (EMIRATES), the United Arab Emirates’ biggest bank, said net income fell 55 percent in the first-quarter as a gain from the sale of a stake in a subsidiary last year wasn’t repeated. The profit beat analysts’ estimates.
Net income dropped to 641 million dirhams ($175 million), or 10 fils a share, from 1.41 billion dirhams, or 24 fils a share, in the year-earlier period, the bank 56 percent owned by the Dubai government said in a statement to Nasdaq Dubai.
Emirates NBD made 1.84 billion dirhams last year from selling 49 percent of its credit-card processing unit Network International LLC.
Banks in the second-largest Arab economy are recovering from a slowdown in lending triggered by the global financial crisis and a real estate crash in Dubai, which hurt investment banking and led to an increase in bad loans. Emirates NBD’s provisions, including for loan losses, fell 20 percent in the first quarter to 1.1 billion dirhams, pushing the ratio of non- performing loans to gross loans to 14.1 percent in March from 13.8 percent in December, the bank said.
The bank expects lending to rise by as much as five percent in 2012, Chief Financial Officer Surya Subramanian told reporters on a conference call. Loan growth in the first quarter “is in line with our full-year expectation of a 4 to 5 percent growth,” he said.
Emirates NBD and its unit have already raised 7.4 billion dirhams this year from bond sales and private placements, Subramanian said. The bank’s loan book was unchanged at 204.1 billion dirhams at the end of March compared with December. Deposits rose 8 percent from December to 208.5 billion dirhams.
Although funds from bond sales “comes to us at a higher cost, the impact of which will flow through from the second quarter, we expect this to be offset by the excellent performance in retail deposit growth,” he said.
First-quarter net interest income rose 8 percent to 1.78 billion dirhams, while non-interest income jumped 49 percent to 909 million dirhams, the bank said. Net interest margin, the difference between what the bank earns from loans and what it pays out on deposits, fell to 2.63 percent in the quarter from 2.85 percent in the fourth quarter last year, the bank said accordingly to Bloomberg.