Emirates NBD Q1 net profit up 8% on lower bad loan provisions

Emirates NBD (ENBD), Dubai’s largest lender, posted an 8 per cent rise in first-quarter net profit on Tuesday, aided by smaller provisions for bad loans.

The first major lender in the UAE to announce its earnings said it made a net profit of Dh1.81 billion in the three months to March 31, a statement from the bank said, compared to Dh1.67bn in the corresponding period of 2015.

Analysts at EFG Hermes and SICO Bahrain had forecast the bank would make a net profit for the quarter of Dh1.87bn and Dh1.93bn respectively.

The bank, 55.6 per cent owned by state fund Investment Corp of Dubai, has benefited from an improvement in the performance of its assets in recent quarters as Dubai government-linked companies have made progress in resolving debt troubles which hamstrung the emirate at the turn of the decade.

The amount of cash set aside for bad loans was Dh829 million in the first quarter, down from Dh1.1bn in the same period of 2015.

A 3 per cent increase in net interest income to Dh2.56bn was also a positive for the bank and helped to offset a 16 per cent jump in operating expenses, which ENBD said was due to higher staffing costs linked with increase business volumes.

Reflecting the tougher operating conditions, the bank forecast in January that loan growth would slip to a mid-single digit percentage in 2016, from 10 per cent in 2015.

However, loans and advances stood at Dh279.1bn at the end of March, up 12 per cent at the same point last year. Deposits rose by the same percentage year-on-year, to Dh290.9bn.


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