Emirates NBD, Dubai's biggest lender by assets, said its first-quarter net profit more than doubled to a record as impairments fell and net interest income surged.
Net profit for the three months to the end of March climbed to more than Dh6 billion ($1.64 billion) from the same period a year earlier, the lender said in a statement on Thursday to the Dubai Financial Market, where its shares are traded.
The strong earnings reflect higher margins, growth of non-funded income and a lower cost of risk on significant recoveries, the lender said.
Total quarterly income surged 64 per cent year on year, crossing the Dh10 billion mark for the first time, as “every business unit delivered higher income and improved profitability”.
The record quarterly performance reflects “the success of the group’s diversified business model and a healthy regional economy”, Hesham Al Qassim, vice chairman and managing director of Emirates NBD, said.
“As a leading bank in the region, we are fully aligned with Dubai’s commitment to continue developing and stimulating entrepreneurship, attracting more foreign investment and consolidating Dubai’s position as a land of opportunity and innovation.”
Emirates NBD said its net interest income increased 69 per cent to Dh7.2 billion, while the net interest margin climbed by 145 basis points year on year to 4.05 per cent at the end of March.
Non-funded income of the lender also surged by 54 per cent to Dh3.3 billion amid continued economic momentum. The total assets of the bank rose 5 per cent to Dh782 billion.
“Increased transaction volumes and improved margins from an efficient funding base and higher interest rates” also helped in boosting the quarterly income, said group chief executive Shayne Nelson.
Central banks across the globe are continuing to increase their benchmark rates to curb inflation.
The US Federal Reserve increased its policy rate twice in the first quarter and is expected to increase it further when it meets next week as it attempts to bring inflation down towards its target range of 2 per cent.
Lenders in the GCC, where most central banks peg their currency to the US dollar, are beneficiaries of higher interest rates amid continued economic momentum and relatively lower inflation in the region.
Profitability of the four largest banks in the UAE will continue to grow this year amid rising interest rates, reversal of pandemic-related provisions and continuing economic momentum, Moody's Investors Service said in March.
After growing 7.6 per cent in 2022, the most in 11 years, the UAE economy is expected to expand 3.9 per cent this year and 4.3 per cent in 2024, the UAE Central Bank said last month.
Emirates NBD said its impairment allowances for loans and advances in the first three months of the year dropped 66 per cent annually to Dh471 million ($128 million).
It underpins the bank's “credit quality”, which improved due to “substantial recoveries reflecting the region’s growing economy”, it added.
Loans and advances rose by 3 per cent to Dh470 billion in the first three months of the year, with the bank recording its highest retail disbursements across conventional and its Islamic retail franchise.
The first quarter “is the strongest ever” for retail lending with over 144,000 new credit cards issued and more than Dh8 billion of retail loan disbursements, Mr Nelson said.
Deposits grew 7 per cent or by Dh35 billion in first quarter to Dh538 billion, including Dh19 billion increase in current and savings accounts.
Indoor cricket in a nutshell
Indoor Cricket World Cup - Sept 16-20, Insportz, Dubai
16 Indoor cricket matches are 16 overs per side
8 There are eight players per team
9 There have been nine Indoor Cricket World Cups for men. Australia have won every one.
5 Five runs are deducted from the score when a wickets falls
4 Batsmen bat in pairs, facing four overs per partnership
Scoring In indoor cricket, runs are scored by way of both physical and bonus runs. Physical runs are scored by both batsmen completing a run from one crease to the other. Bonus runs are scored when the ball hits a net in different zones, but only when at least one physical run is score.
Zones
A Front net, behind the striker and wicketkeeper: 0 runs
B Side nets, between the striker and halfway down the pitch: 1 run
C Side nets between halfway and the bowlers end: 2 runs
D Back net: 4 runs on the bounce, 6 runs on the full
KILLING OF QASSEM SULEIMANI
Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
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.”
Tips from the expert
Dobromir Radichkov, chief data officer at dubizzle and Bayut, offers a few tips for UAE residents looking to earn some cash from pre-loved items.
- Sellers should focus on providing high-quality used goods at attractive prices to buyers.
- It’s important to use clear and appealing photos, with catchy titles and detailed descriptions to capture the attention of prospective buyers.
- Try to advertise a realistic price to attract buyers looking for good deals, especially in the current environment where consumers are significantly more price-sensitive.
- Be creative and look around your home for valuable items that you no longer need but might be useful to others.
