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Dubai bank Emirates NBD’s Q2 net profit rises 16%

Dubai bank Emirates NBD’s Q2 net profit rises 16%

The bank made a net profit of Dhs 1.91bn in the three months to June 30

Dubai’s largest lender, Emirates NBD (ENBD), reported a 16 per cent rise in second-quarter net profit on Monday, broadly in line with analysts’ forecasts, aided by a cut in the amount of cash it sets aside to cover bad debt.

The bank, seen as a gauge of the emirate’s economy, warned that Dubai’s economic growth is expected to slow in 2016 as lower oil prices contribute to tighter fiscal policy.

ENBD recorded its 16th consecutive quarter of rising earnings at a time when profitability at other lenders in the United Arab Emirates is challenged by a weaker economy.

ENBD made a net profit of Dhs 1.91bn ($520m) in the three months to June 30, it said in a statement.

This was well ahead of the Dhs 1.65bn it earned in the corresponding period of 2015, as well as the Dhs 1.8bn consensus estimate from four analysts.

Driving profit growth was a 30 per cent drop in provisions to Dhs 626m, as the cost of risk continued to improve and it recovered more cash from loans previously classed as bad, it said.

Reflecting the bank’s improved performance, ENBD’s non-performing loans ratio eased to 6.6 per cent. The rate has gradually improved from a peak of 14.3 per cent in 2012 following the real estate crash and a debt crisis at Dubai state-owned investment companies.

Net interest income from traditional banking operations rose 2 per cent to Dhs 2.54bn, aided by higher loan growth and a year-on-year increase in the Emirates Interbank Offered Rate, against which local currency loans are priced.

This growth helped offset a 6 per cent increase in operating expenses, despite the bank laying off around 300 people earlier this year at Emirates Islamic Bank and another subsidiary.

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