Emirates NBD Q1 Net Profit Jumps 31%

Emirates NBD, Dubai’s largest bank by market value, on Thursday said its first-quarter net profit rose 31 percent on the back of lower impairments, beating the average forecast of analysts.

The lender, 55.6-percent owned by state fund Investment Corp of Dubai, made a net profit of 837 million dirhams ($227.9 million) in the three months to March 31, compared to 641 million dirhams in the same period last year.

An average of three analysts polled by Reuters had forecast a net profit of 676 million dirhams.

Bad loan provisions for the opening quarter stood at 888 million dirhams, down from the 1.1 billion dirhams which the bank recorded in the same three months of last year.

The lender was hit hard by impairment allowances in the latter half of 2011 and the first six months of 2012, which dragged down profits. Its exposure to indebted Dubai state-linked entities was among the main reasons for this.

Both net interest income and non-interest income were broadly the same year-on-year during the first quarter of 2013, with the former slipping 2 percent to 1.75 billion dirhams and the latter dipping 3 percent to 882 million dirhams.

Loans and advances stood at 220.6 billion dirhams at the end of March, up 1 percent on the end of 2012. Chief Executive Rick Pudner, who the bank confirmed earlier this week will leave the post at the end of this year, in January forecast 5 percent loan growth in 2013.

Meanwhile, deposits increased 4 percent on the end of last year to 223 billion dirhams.

In December, ENBD announced it would buy the Egyptian business of French lender BNP Paribas for $500 million in a first step towards diversifying beyond its Dubai base.

ENBD priced a $750 million subordinated bond in March, an offer which was expected to help repay part of the 12.6 billion dirhams which the bank received from the government in 2008 as part of wide-ranging support for United Arab Emirates banks during the global financial crisis.

The bank said in January it was looking to begin repaying the debt, which was converted into capital boosting bonds in late 2009, as the value of the instruments has diminished and access to finance from the market has become cheaper.

However, it has yet to announce a payment. The bank’s total capital adequacy ratio declined 0.9 percentage point in the first quarter to 19.7 percent, because of an increase in risk-weighted assets and the payment of dividends for 2012, the statement added. ($1 = 3.6732 UAE dirhams)