Emirates NBD PJSC (EMIRATES), the United Arab Emirates’ biggest bank by assets, reported a 59 percent decline in third-quarter profit, missing forecasts by analysts, as it boosted provisions to cover for bad loans.
Net income fell to 175 million dirhams ($48 million), or 2 fils a share, from 424 million dirhams, or 6 fils, a year earlier, the government-controlled bank said in a statement to the Dubai bourse today. That fell short of the 781 million- dirham median estimate of three analysts surveyed by Bloomberg.
We are “adopting a significantly more conservative approach to de-risking the balance sheet,” Chief Executive Officer Rick Pudner said in the statement today. “While the outlook has become more cautious and uncertain,” the bank has strong levels of capitalization and liquidity for the future, he said.
The U.A.E. economy, the Arab world’s second-biggest, is rebounding from the effects of the global credit crisis, which hurt its property industry, slowed trade and led to an increase in loan defaults. Non-performing loans at U.A.E. banks are expected to peak at about 12 percent this year after rising from last year’s 8 percent to 10 percent, Khalid Howladar, a senior credit officer at Moody’s Investors Service, said in March.
The U.A.E. economy will expand by 4 percent this year from 3 percent in 2010, according to Standard Chartered Plc.
Emirates NBD reported a 27 percent increase in impairment allowance for the quarter to 1.57 billion dirhams, according to the statement. Without including impairment provisions, operating profit declined 6 percent to 1.76 billion dirhams.
Emirates NBD will take over loss-making Islamic lender Dubai Bank PJSC as part of the Dubai government’s plan to boost the emirate’s banking industry, the government announced Oct. 11. The takeover will not hurt Emirate NBD’s profit nor increase its non-performing loans ratio, Emirates NBD said that day.
The shares have risen 34 percent this year, compared with a 1 percent decline in the Dubai Financial Market Financial Banks Index.
To contact the reporter on this story: Arif Sharif in Dubai at firstname.lastname@example.org
To contact the editor responsible for this story: Claudia Maedler at email@example.com