Emirates NBD Beats Estimates With 35% Quarterly Profit Rise

Emirates NBD PJSC (EMIRATES), the United Arab Emirates’ second-biggest bank by assets, reported quarterly profit that beat analysts’ estimates as fees and interest income increased.

Net income rose 35 percent to 1.31 billion dirhams ($356 million) in the three months through June, from 972 million dirhams a year earlier, the state-controlled lender said today in a statement to the stock exchange. That exceeded the 1.1 billion-dirham median estimate of four analysts compiled by Bloomberg. The bank’s shares gained 4.2 percent.

Emirates NBD, which joins lenders including National Bank of Abu Dhabi and Abu Dhabi Commercial Bank in beating profit estimates, expects the U.A.E. and Dubai economies to grow by 5 percent this year, driven by oil sales, real estate, trade and tourism. Chief Executive Officer Shayne Nelson said the bank’s exposure to Dubai World, which reached a deal with creditors in March 2011 on $14.7 billion of debt, fell by 2.2 percent to 9.1 billion dirhams during the quarter after the state-owned company made a repayment.

“I have focused management efforts on balance sheet optimization, diversification of income, addressing the legacy NPL position, improved capital efficiency and stronger liquidity,” Nelson said in a statement. “The bank is in a healthier position than at the beginning of 2014 in these areas.”

The stock rose to 9.90 dirhams in Dubai after yesterday gaining 5.7 percent. Emirates NBD has jumped 56 percent this year.

Revised Guidance

While Emirates NBD revised down its guidance for 2014 loan growth to 4 percent to 5 percent, the bank raised its projection for net interest margins by 20 basis points.

Most loan growth was coming from consumer and Islamic banking, Nelson said on a conference call today.

“New loan formation has not been high in the first half,” he said. “Some of this is due to a transition of borrowers into the capital markets.”

Loans to the Dubai government climbed to 98.6 billion dirhams, from 91 billion at the end of 2013, the bank said.

“We have regular discussions with our relevant stakeholders, including the government of Dubai, on how to reduce the exposure,” said Nelson.

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To contact the reporter on this story: Matthew Martin in Dubai at mmartin128@bloomberg.net

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

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