Emirates NBD Q4 Profit Jumps 82%, Reclassifies Dubai World Loans

Emirates NBD (ENBD), Dubai’s largest bank, on Sunday reported an 82 per cent leap in fourth-quarter net profit, broadly in line with analysts’ forecasts, because of strong growth across its business as the emirate’s economy boomed.

The lender, 55.6 per cent owned by state fund Investment Corp of Dubai, made a net profit of Dhs1.23 billion ($335 million) in the three months to Dec. 31, compared to Dhs673 million in the same period of 2013.

An average of four analysts polled by Reuters had forecast a profit of Dhs1.25 billion for the quarter.

The bank said its balance sheet in 2014 was strengthened by its reclassification of exposure to state-controlled conglomerate Dubai World, which has been restructuring its debt, as performing. This helped its coverage ratio for bad loans reach 100.3 per cent at the end of 2014.

ENBD is Dubai World’s biggest creditor with exposure of Dhs8.54 billion, according to its third-quarter investor presentation. Last week Dubai World said it had won 73 per cent creditor consent for a $14.6 billion debt restructuring deal that would involve early repayment of some debt and extension of a big 2018 repayment to 2022.

The Dubai bank said its net profit for all of 2014 rose 58 per cent to Dhs5.14 billion.

For the year, net interest income climbed 17 per cent to Dhs9.5 billion as the bank focused on growing its assets within higher margin retail and Islamic businesses.

Non-interest income reached Dhs4.9 billion, up 33 per cent, because of higher income from trade finance, foreign exchange and brokerage businesses and asset management, as well as gains from property and investment sales.

Like other Dubai banks, ENBD’s earnings have been given a lift in recent quarters by a resurgence of the Dubai economy, which has been boosted by a strengthening property market and an easing of debt troubles after a financial crisis.

“It is important to note that each part of the business delivered year-on-year revenue growth,” Hesham Abdulla al-Qassim, vice chairman of ENBD, said in the statement.

ENBD’s board of directors recommended an annual dividend of Dhs0.35 per share for 2014, up from Dhs0.25 in the year-earlier period.

Total revenues at its Egyptian operations last year rose 16 per cent to Dhs706 million, while deposits also climbed 16 per cent to Dhs10.2 billion and net profit totalled Dhs232 million. It was ENBD’s first full year of ownership of its Egypt operations, after it bought the business from BNP Paribas for $500 million in 2013.