Emirates NBD's Q3 profit jumps 38% on interest income boost

Net income for the three months to the end of September climbed to $1.4 billion

The Dubai lender's net interest income rose more than 25 per cent annually in the third quarter. Reuters

Emirates NBD, Dubai's biggest lender by assets, recorded a 38 per cent annual jump in its third-quarter net profit as net interest income surged amid continued economic momentum in the UAE.

Net profit attributable to equity holders of the group for the three months to the end of September climbed to Dh5.2 billion ($1.4 billion), the lender said on Thursday in a filing to the Dubai Financial Market, where its shares are traded.

Net interest income in the quarter stood at Dh6.4 billion, up more than 25 per cent from the same period a year earlier, while net income from Islamic financing and investment products rose 48 per cent on an annual basis to Dh1.3 billion.

Net impairment loss on financial assets in the quarter fell to Dh553.2 million, from Dh1.37 billion during the same period last year.

“The buoyant economy, coupled with our focus on service excellence through new product and service delivery, is propelling growth,” said Hesham Al Qassim, Emirates NBD's vice chairman and managing director.

The UAE, the Arab world's second-largest economy, made a strong rebound last year from the slowdown caused by Covid-19, and carried forward the growth momentum into 2023.

The resurgence has come on the back of higher oil prices and government measures to mitigate the impact of the pandemic.

The country's economy grew by 7.9 per cent in 2022, the most in 11 years.

It is expected to expand by 3.3 per cent this year and 4.3 per cent in 2024, according to UAE Central Bank data.

Business activity in the UAE’s non-oil private sector expanded robustly in September as the addition of new clients, competitive pricing and sturdy underlying economic conditions drove demand.

The seasonally adjusted S&P Global purchasing managers’ index reading climbed to 56.7 in September, from 55 in August, settling well above the neutral 50 mark that separates growth from contraction.

Emirates NBD's nine-month profit surged 92 per cent, year on year, to Dh17.5 billion as net interest income and net income from Islamic financing and investment products rose by 43 per cent to Dh22.3 billion.

Impairment allowances during the period fell 54 per cent to Dh1.5 billion.

Lenders in the UAE, similar to their regional peers, are beneficiaries of higher interest rates amid relatively lower inflation in the region.

Most central banks in the six-member GCC economic bloc peg their currencies to the US dollar and follow the US Federal Reserve's interest rate moves.

The Fed has aggressively increased its benchmark rates over the past several quarters to bring inflation down to 2 per cent target range in the world's largest economy.

In the first nine-months, Emirates NBD's gross loans rose by 8 per cent to Dh494 billion.

Total assets jumped 16 per cent annually to Dh836 billion.

Customer deposits during the nine-month period grew 19 per cent annually to Dh570 billion and 13 per cent compared with December-end.

Emirates NBD’s profit surged in the first nine months “on significant loan growth, a stable low-cost funding base, increased transaction volumes and substantial recoveries”, group chief executive Shayne Nelson said.

“We delivered an impressive … loan growth on strong retail lending momentum coupled with the corporate bank closing landmark deals for large multinational customers.”

Last month, the lender made an equity investment in Geneva-based digital trade finance platform Komgo, as part of its plans to increase its digital services through FinTech companies.