ENBD beats forecasts as Q2 profits surge 50pc
Dubai, July 22, 2013
Emirates NBD's (ENBD) second-quarter net profit rose 50 percent, beating analysts' forecasts, as Dubai's largest lender benefited from an recovery in the emirate's economy.
ENBD, 55.6-percent owned by state fund Investment Corp of Dubai, made a net profit of 972 million dirhams ($264.6 million) in the three months to June 30, compared with 647 million dirhams in 2012, a statement from the bank said on Monday.
An average of five analysts polled by Reuters forecast a net profit of 783.8 million dirhams for the quarter.
Shares rose 3.5 percent by 0647 GMT, taking their gains so far this year to 75.1 percent. The stock has benefited in 2013 as investor confidence that Dubai's economy is recovering, helped by a revival in real estate and tourism, has fed through into the banking sector.
Both net interest and non-interest income rose 17 percent in the second quarter year-on-year, aided respectively by higher loan and deposit spreads and increased fee income.
Also boosting non-interest income was the sale of part of its stake in Union Properties during the first half of the year. The bank didn't provide any details in its earnings statement but it remains the developer's largest shareholder with 31.4 percent of the firm, according to Dubai bourse data.
ENBD booked impairments of 997 million dirhams in the second quarter of this year, marginally up on the 954 million dirhams recorded in the same three months of 2012.
The lender was heavily hit by impairment allowances in the latter half of 2011 and the first six months of 2012. However, the previous three quarters had seen the growth of impairments stall and, while still high, seemed to have peaked.
Loans and advances stood at 231.8 billion dirhams at the end of June, up 6 percent on the end of 2012. Meanwhile, deposits increased 8 percent over the same timeframe, standing at 230.4 billion dirhams at the end of June.
In May, it raised $1 billion from a capital-boosting bond. This helped increase its Tier 1 ratio - a key measure of financial strength - to 14.5 percent at the end of June, from 13.5 percent at the end of March.
ENBD has now repaid 7.8 billion dirhams of support from the United Arab Emirates government which it had received in the wake of the global financial crisis, the statement said. It had already repaid 3 billion dirhams out of the 12.6 billion dirhams of total support it had received in April. – Reuters