khaleejtimes, Thursday, Apr 20, 2017 | Rajab 23, 1438
Emirates NBD profits up 4% at Dh1.87 billion on cost cutting
Emirates NBD announced on Wednesday a four per cent jump in first quarter net
profit to Dh1.87 billion, saying a control on expenses and lower provisions
ensured better operating performance.
The lender, one the leading banks in the region, said net interest income
improved one per cent quarter-on-quarter due to loan growth coupled with an
improvement in margins.
Core gross fee income increased 27 per cent quarter on quarter and seven per
cent year on year on the back of higher income from forex and rates.
In a statement, the bank said net interest margin improved during the quarter as
rate rises flowed into loan yields and funding pressures receded. The bank's
balance sheet continues to strengthen with further improvements in credit
quality and liquidity, coupled with solid capital ratios.
"Total income rose four per cent to Dh3.6 billion quarter on quarter and
declined seven per cent year on year due to lower gains from the sale of
investments," Emirates NBD said.
Total assets rose one per cent to Dh452 billion and customer loans grew two per
cent to Dh295.3 billion. Customer deposits also saw a three per cent rise to
Dh19.2 billion from end 2016.
The bank said impaired loan ratio improved to 6.3 per cent while the impaired
loan coverage ratio strengthened to 122.5 per cent while advances to deposit
ratio at 92.5 per cent remains comfortably within the management's target range.
The bank's Tier 1 Capital Ratio declined to 17.8 per cent as retained profit was
more than offset by the payment of the annual dividend.
Hesham Abdulla Al Qassim, vice-chairman and managing director, Emirates NBD,
said the lender made an encouraging start to the year and further strengthened
its balance sheet, with improvements in credit quality and liquidity, coupled
with strong capital ratios.
"We are delighted that our Investment Bank and Asset Management units
successfully completed the UAE's first IPO of 2017 with the launch of ENBD Reit.
We are also particularly pleased to be ranked the UAE's most valuable banking
brand, and 75th worldwide, by The Banker." Shayne Nelson, group chief executive
officer, said the growth in net profit was underpinned by a control on expenses
and an improved cost of risk.
"The group's liquidity position remained strong and we are focused on improving
margins by enhancing our funding base. We unveiled Liv., the UAE's first digital
bank targeted at millennials, which offers a differentiated digital experience
for a new generation of customers. We are well positioned to utilise our strong
franchise, digital capabilities and financial strength to take advantage of
growth opportunities within the region."
Group chief financial officer, Surya Subramanian, said the operating performance
for the first quarter of 2017 was pleasing as we saw margins improve compared to
"This margin increase is due to an improvement in funding costs coupled with
loan pricing benefiting from rising interest rates. The cost to income ratio, at
30.9 per cent, is comfortably within management targets, enabling us to invest
to support future growth. We also delivered a further improvement in credit
quality and this, coupled with an improvement in margins, and lower costs is a
position we expect to hold for the remainder of 2017."
The bank said it expects growth in the UAE to improve to 3.4 per cent this year
as higher oil prices contribute to improved consumer and business sentiment in
2017 and facilitate slightly higher government spending.
"We expect the UAE's growth to accelerate to 4.1 per cent in 2018, with Dubai
expected to enjoy stronger non-oil activity growth on the back of increased
investment in infrastructure. Anticipation of a five per cent VAT to be
introduced in early 2018 may boost spending in the second half of 2017, as
consumers bring forward purchases that otherwise would be made in 2018," the