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Emirates NBD Second-Quarter Profit Gains 50% on Fee Income

Emirates NBD PJSC, (EMIRATES) Dubai’s biggest bank, reported second-quarter profit that beat analysts’ estimates as fee income climbed amid the emirate’s economic recovery. The shares surged.

Net income rose 50 percent to 972 million dirhams ($265 million) from 647 million dirhams a year earlier, the Dubai government-controlled lender said in a regulatory filing today. The mean estimate of six analysts was for a profit of 799 million dirhams, according to data compiled by Bloomberg. Net interest income and non-interest income each climbed 17 percent.

Emirates NBD, which last month hired Shayne Nelson from Standard Chartered Private Bank as chief executive officer, is recovering from a real-estate crash in Dubai after the 2008 global credit crisis triggered a rise in debt defaults. The bank’s impaired-loan ratio declined to 13.9 percent at the end of June from 14.3 percent on Dec. 31.

“Emirates NBD reported strong lending growth coming out of three sectors,” Chiradeep Ghosh, an analyst at Securities & Investment Co. BSC, said today by phone from Manama. “Retail, sovereign and services. The focus on these sectors shows it is down to Dubai’s revival.”

The stock jumped 7.9 percent to 5.20 dirhams at 12:08 p.m. in Dubai and has gained about 83 percent this year as Dubai’s economy rebounds, with the government forecasting an average economic growth of 4.6 percent between 2012 and 2015.

Lending Limits

The results are “a reflection of positive momentum in the U.A.E. economy, which has continued to be resilient despite the continued uncertain global economic climate,” outgoing CEO Rick Pudner said in the statement. Mortgage bookings continued steady growth from the end of last year, the bank said, without giving further details.

Emirates NBD is among U.A.E. lenders which are seeking a five-year grace period from the central bank to comply with new rules to limit lending to government and government-related entities. The bank is 56 percent state owned.

Last month Emirates NBD said Pudner will leave the U.A.E.’s second-biggest bank by assets at the end of the year after eight years. The lender this month hired Arjuna Mahendran as chief investment officer of its wealth management division from HSBC Holdings Plc as it seeks to expand the business of managing money for the rich.

The U.A.E., the second-largest Arab economy, has the biggest banking market in the six-nation Gulf Cooperation Council, which also includes Saudi Arabia. Annual profit at Emirates NBD may climb 15 percent to 2.95 billion dirhams, according to the average estimate of seven analysts.

Emirates NBD in December acquired the Egyptian unit of BNP Paribas SA in a $500 million deal, helping it enter the most-populous Arab country. The bank is keen to expand in the Middle East, North Africa, Turkey and Islamic nations in south and south east Asia, it said in December.

To contact the reporter on this story: Samuel Potter in Dubai at spotter33@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net; Daliah Merzaban at dmerzaban@bloomberg.net

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