Dubai’s Emirates NBD posts 6% rise in Q2 profit

Emirates NBD (ENBD), Dubai’s largest lender, posted a 6 per cent rise in its second-quarter net profit on Wednesday, in line with analysts’ forecasts, as net interest income edged up due to loan growth and higher lending rates.

The bank, the first major lender from the United Arab Emirates to report its earnings this quarter, made a net profit of Dhs2.02bn ($550m) in the three months to June 30, it said in a statement, compared with Dhs1.91bn a year earlier.

Three analysts on average had forecast the bank to post a net profit of Dhs1.88bn.

The bank, 55.6 per cent owned by state fund Investment Corp, is considered a reliable indicator for the strength of the Dubai economy.

The emirate’s economy expanded at a stronger rate during the first half of 2017 compared with a year earlier, buoyed in part by a pick-up in trade and construction activities.

ENBD’s net interest income improved 6 per cent in the second quarter, with the bank citing loan growth and a higher Emirates Interbank Offered Rate as helping offset a contraction in net interest margins.

Net interest margins reached 2.49 per cent, down by 0.06 per cent from a year ago but better than the first quarter.

Non-interest income dipped 7 per cent due to lower gains from the sale of investment securities.

Costs rose 7 per cent as cost-control measures introduced in 2016 had taken effect, it said.

Emirates Islamic, the bank’s sharia-compliant arm, laid off around 300 people last year, while ENBD cut around 100 jobs from another subsidiary.

The bank’s non-performing loans ratio, which reached a peak of 14.3 per cent in 2012 in the wake of a real estate crash and debt crisis in Dubai, improved to 6.1 per cent during the quarter.