Emirates NBD Beats Estimates as First-Quarter Profit Jumps 31%

Emirates NBD PJSC (EMIRATES), Dubai’s biggest bank, reported a 31 percent rise in first-quarter profit, beating analyst estimates, as loan-loss provisions declined.

Net income advanced to 836.8 million dirhams ($228 million), or 14 fils a share, from 641 million dirhams, or 10 fils a share, a year earlier, the Dubai government-controlled lender said in a regulatory filing today. Profit beat the 686.3 million-dirham mean estimate of five analysts compiled by Bloomberg. The bank’s impairment provisions for bad loans fell 19 percent from a year ago to 888 million dirhams.

Emirates NBD, whose Chief Executive Officer Rick Pudner will leave at the end of the year after more than seven years in the job, is recovering from the global credit crisis, which slowed lending, hurt investment banking and led to a surge in loan-loss charges as defaults rose. Dubai’s economy, the second- biggest in the United Arab Emirates, is set to expand 4.6 percent on average between 2012 and 2015, more than twice as fast in the prior four years, government forecasts show.

Pre-provision operating profit “shows signs of growth after a few resilient quarters,” Chief Financial Officer Surya Subramanian said in the statement. The retail and Islamic banking businesses were key reasons behind this growth, he said.

Emirates NBD’s ratio of non-performing loans to total loans fell to 14.2 percent in the first quarter from 14.3 percent in the preceding three months, it said. The bank is one of the biggest lenders to investment company Dubai Group LLC, which is negotiating to restructure $6 billion of bank debt.

Economic Recovery

U.A.E.’s economic recovery is helping improve profit at banks. National Bank of Abu Dhabi PJSC, which overtook Emirates NBD this quarter as the U.A.E.’s biggest bank by assets, reported April 23 a better-than-anticipated jump in first- quarter profit to 1.4 billion dirhams from 1.04 billion. Dubai Islamic Bank PJSC (DIB), the country’s biggest Shariah-compliant lender, reported a 17 percent rise in first-quarter profit to 301.7 million dirhams.

Emirates NBD’s net interest income fell 2 percent to 1.75 billion dirhams as the net interest margin narrowed to 2.39 percent from 2.63 percent a year earlier, it said. The bank’s loan book expanded 8 percent from a year ago to 220.6 billion dirhams and deposits grew 7 percent to 223 billion dirhams.

Bank lending in the U.A.E., the second-biggest Arab economy, rose 2.6 percent in 2012, according to central bank data. That compares with a 16 percent rise in lending to the private sector in Saudi Arabia, the biggest Arab economy, and a 27 percent rise in gas-rich Qatar, central bank data shows.

Emirates NBD in December agreed to buy Paris-based BNP Paribas SA’s 95.2 percent stake in its Egyptian unit in a $500 million acquisition to gain access to the most populous Arab country.

Shares of Emirates NBD surged 10.6 percent to 4.99 dirhams yesterday, taking gains this year to 75 percent. The exchange’s benchmark index has risen 26 percent.

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

To contact the editors responsible for this story: Claudia Maedler at cmaedler@bloomberg.net; Dale Crofts at dcrofts@bloomberg.net

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