First-quarter profit at Emirates NBD soars on back of credit cards and money transfers

Emirates NBD, Dubai’s biggest bank, said its first quarter profit jumped 60 per cent as it made more money from its customers through credit cards and international money transfers.

Gains at the bank’s wholly-owned banking subsidiary Emirates Islamic also helped Emirates NBD take the lead in profitability among UAE banks that have reported first quarter earnings.

Net income increased to Dh1.671 billion from Dh1.042bn in the same period the previous year, the bank said. Net interest income, the money the bank made from loan interest payments, grew 11 per cent to Dh2.485bn from the same period last year while non-interest income advanced 23 per cent to Dh1.36bn from Dh1.102bn.


Shayne Nelson, the chief executive of Emirates NBD, said the results were driven by higher income, stable expenses and lower provisions, also noting that Emirates Islamic recorded impressive growth in both income and assets. However, Mr Nelson sounded a note of caution as oil prices have not yet recovered from last year’s battering when crude lost more than half of its value. The dollar’s strength is also a concern, he said. The UAE dirham is pegged to the dollar and that may impede investment in property and other assets.

“We remain cautiously optimistic for the remainder of 2015 but are conscious of the headwinds that a strong dollar and low oil price can present,” he said.

“Following the drop in oil prices, the bank adjusted its 2015 UAE growth forecast down to 4.3 per cent from 4.8 per cent. We expect tourism to remain an important contributor to growth, notwithstanding more challenging conditions in key markets such as Russia. Other non-oil sectors, including manufacturing, transport, logistics and construction are also expected to grow.”

UAE banks registered record high profits in the past couple of years as the UAE’s economy recovered from the financial crisis of 2008. But banks are focusing more on making money from higher yielding individual customers and small and medium-sized enterprises in the aftermath of the oil price fall.

That is because larger government corporations that are sensitive to the fluctuation in hydrocarbon prices may not have a big appetite for tapping the debt market. Lenders are also beefing up their fee-generating businesses such as trade finance, wealth management and securities brokerage.

Emirates NBD said that its retail banking and wealth management division had a 20 per cent increase in fee income as it grew its remittance service that offers fund transfers to partner banks in India, the Philippines and Pakistan, and made more money from credit card fees.

“You are seeing a growth in fee income across the board from banks,” said Sanyalak Manibhandu, the manager of research at NBAD Securities. “What is happening is that you are seeing growth in things like remittances. As long as there are lots of expats in the UAE who need to send remittances back home things like this will allow banks to increase their non-funded income.”

mkassem@thenational.ae

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