Emirates NBD, Dubai's biggest lender by assets, reported a more than 42 per cent surge in second-quarter net profit as provisions for bad loans dropped and revenue increased on net interest income boost.
Net profit for the three months to the end of June climbed to Dh3.5 billion ($953.7 million), the lender said in a statement on Thursday to the Dubai Financial Market, where its shares are traded.
Emirates NBD's total operating income for the April-June period climbed to Dh7.79bn from Dh5.37bn recorded for the same period last year. Net interest income jumped more than 24 per cent year on year to Dh4.41bn for the reporting period.
Net impairment charges dropped almost 46 per cent annually to Dh460m, the lender said.
The bank's net profit for the first six months of this year climbed 11 per cent on an annual basis to Dh5.3bn, its strongest set of first-half results since 2019.
Record half-year retail lending together with improving margins drove total income for the reporting period 23 per cent higher to Dh14.2bn.
Provisions for loan losses during the six-month period fell 28 per cent year on year to Dh1.9bn, reflecting strong writebacks and recoveries and a brighter economic outlook in an "improving operating environment", said Shayne Nelson, group chief executive of Emirates NBD.
"These strong results, along with the positive outlook for margins, enable us to accelerate our investment in our international network and digital capabilities, supporting our next stage of growth,” he said.
The UAE economy, which bounced back strongly from the Covid-19 pandemic-driven slowdown in 2021, carried the growth momentum into this year. The economic recovery has picked up pace, driven by a rebound in the tourism and property sectors.
The Arab world's second-biggest economy is poised to post its strongest annual expansion this year since 2011 after it grew by 8.2 per cent in the first three months of 2022, according to the Central Bank of the UAE.
Higher oil prices have further supported economic activity that has improved operating conditions for lenders in the Emirates.
Banks across the six-member GCC economic bloc stand to gain from higher energy prices and a rise in interest rates that will significantly improve their bottom lines as cost of risk continues to decline, S&P Global Ratings said.
On average, a 100-basis-point increase in benchmark interest rates would boost earnings by 13 per cent and result in 1 per cent capital accretion for lenders across the region, the rating agency said.
In anticipation of further expected rate rises, coupled with improving margins at subsidiary DenizBank, Emirates NBD raised its net interest margin guidance by 50 basis points.
"The UAE banking sector continues to benefit from ample liquidity, helped by the high oil price," said Patrick Sullivan, chief financial officer at Emirates NBD.
“We have maintained good income growth momentum, kept a firm control of costs and seen a consistent decline in the cost of risk."
The Dubai lender's customer loans grew 1 per cent to Dh425bn in the first half of the year, while deposits advanced 2 per cent to Dh468bn. Total assets at the end of June climbed 3 per cent to Dh711bn.
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How Islam's view of posthumous transplant surgery changed
Transplants from the deceased have been carried out in hospitals across the globe for decades, but in some countries in the Middle East, including the UAE, the practise was banned until relatively recently.
Opinion has been divided as to whether organ donations from a deceased person is permissible in Islam.
The body is viewed as sacred, during and after death, thus prohibiting cremation and tattoos.
One school of thought viewed the removal of organs after death as equally impermissible.
That view has largely changed, and among scholars and indeed many in society, to be seen as permissible to save another life.
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Squad
Ali Kasheif, Salim Rashid, Khalifa Al Hammadi, Khalfan Mubarak, Ali Mabkhout, Omar Abdulrahman, Mohammed Al Attas, Abdullah Ramadan, Zayed Al Ameri (Al Jazira), Mohammed Al Shamsi, Hamdan Al Kamali, Mohammed Barghash, Khalil Al Hammadi (Al Wahda), Khalid Essa, Mohammed Shaker, Ahmed Barman, Bandar Al Ahbabi (Al Ain), Al Hassan Saleh, Majid Suroor (Sharjah) Walid Abbas, Ahmed Khalil (Shabab Al Ahli), Tariq Ahmed, Jasim Yaqoub (Al Nasr), Ali Saleh, Ali Salmeen (Al Wasl), Hassan Al Muharami (Baniyas)
ADCC AFC Women’s Champions League Group A fixtures
October 3: v Wuhan Jiangda Women’s FC
October 6: v Hyundai Steel Red Angels Women’s FC
October 9: v Sabah FA
RESULT
West Brom 2 Liverpool 2
West Brom: Livermore (79'), Rondón (88' )
Liverpool: Ings (4'), Salah (72')
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
