Emirates NBD Fourth-Quarter Profit Surges; Beats Estimates

Emirates NBD PJSC’s fourth-quarter profit quadrupled, beating analyst estimates, as loan-loss charges at the biggest United Arab Emirates bank fell and income from affiliates increased.

Net income of the Dubai-based lender advanced to 625 million dirhams ($170.2 million), or 10 fils a share, from 152 million dirhams, or 2 fils a share, a year earlier, it said in a statement today. Profit beat the 517 million-dirham mean estimate of six analysts, according to data compiled by Bloomberg. The bank’s impairment allowances fell 11 percent to 940 million dirhams.

Emirates NBD, 56 percent owned by Dubai’s government, is recovering from the impact of the global credit crisis which slowed lending, hit investment banking and led to a surge in loan-loss charges as defaults rose. Dubai, the second-biggest of seven emirates that make up the U.A.E., is forecast to post its best economic growth in five years in 2012 of 4.3 percent, helped by its tourism, transport, retail and trade industries.

These are “strong” results and “in combination with our strong levels of capitalization and liquidity, positions the bank to take advantage of growth opportunities in the future,” Chief Executive Officer Rick Pudner said in the statement.

Non-Performing Loans

The bank had a profit from associate companies, which include Union Properties PJSC, of 37 million dirhams compared with a 227 million-dirham loss a year earlier.

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

Emirates NBD’s net interest income fell 8 percent to 1.77 billion dirhams as the net interest margin narrowed to 2.47 percent from 2.85 percent a year earlier, it said. The bank’s loan book expanded 7 percent in the year to 218.2 billion dirhams and deposits grew 11 percent to 213.9 billion dirhams.

Higher Dividend

Bank lending in the U.A.E., the second-biggest Arab economy, rose 2.8 percent in the 12 months through October, according to central bank data. That compares with a 15 percent rise in lending to the private sector in Saudi Arabia in the 12 months through November, according to Saudi central bank data.

Emirates NBD’s board recommended a cash dividend 25 fils a share, compared with 20 fils in each of the previous three years. In December, the bank agreed to buy Paris-based BNP Paribas SA’s 95.2 percent stake in its Egyptian unit that valued the Egyptian bank at $500 million.

Shares of Emirates NBD surged 8.6 percent to 3.8 dirhams on Jan. 29, the last day they traded before being suspended ahead of the results announcement. The shares have risen 33 percent this year compared with a 15 percent advance in the benchmark DFM General Index.

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