Emirates NBD Net Income More Than Triples as Loan Losses Decline

Emirates NBD PJSC (EMIRATES) more than tripled third-quarter profit as lower provisions for loan losses at the United Arab Emirates’ biggest bank by assets outweighed a decline in income from lending.

Net income of the Dubai-based lender advanced to 640 million dirhams ($174 million), or 10 fils a share, from 175 million dirhams, or 2 fils a share, a year earlier, Emirates NBD said in a statement today. Profit almost met the 648 million- dirham median estimate of four analysts compiled by Bloomberg. The bank’s allowances for impairments fell 36 percent to 1.01 billion dirhams.

Emirates NBD, which is 56 percent owned by the Dubai government, posted drops in profit in the prior four quarters as it booked losses from loans to some state-run companies as they restructured debt. Dubai’s economy is recovering as the emirate’s retail and tourism industries extend their best year since the 2008 property crash. Some Dubai-linked companies have successfully rolled over loans this year.

“This performance demonstrates our ability to take advantage of gradually improving economic conditions,” Chief Executive Officer Rick Pudner said in the statement. “While the outlook continues to be cautious and uncertain, our strong levels of capitalization and liquidity” will enable us to take advantage of selected growth opportunities, he said.

Emirates NBD’s ratio of non-performing loans to total loans climbed to 14.4 percent in the third quarter from 14.3 percent in the preceding three months. The bank is one of the biggest lenders to investment company Dubai Group LLC, which is in talks to restructure $6 billion of debt.

Lending Limits

Banks in the U.A.E., a federation of seven sheikhdoms including Abu Dhabi and Dubai, are extending less credit to government and quasi-sovereign clients to comply with central bank rules limiting their exposure to each at 100 percent of regulatory capital.

Emirates NBD’s third-quarter net interest income fell 11 percent to 1.73 billion dirhams as the net interest margin narrowed to 2.35 percent from 2.96 percent a year earlier, the bank said. The bank’s loan book expanded 2 percent in the year to Sept. 30 to 212.5 billion dirhams, while deposits grew 3 percent to 214.2 billion dirhams, the data show. Non-interest income jumped 21 percent to 790 million dirhams.

Shares of Emirates NBD fell 0.7 percent to 2.94 dirhams yesterday, valuing the bank at 16.3 billion dirhams. The shares are unchanged this year compared with a 22 percent advance in the benchmark DFM General Index.

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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