Emirates NBD, Dubai's biggest bank by assets, posted a 37 per cent jump in third-quarter net profit, beating analysts' forecasts, as margins and operating income rose and the amount set aside to cover bad debts shrank.
Net profit attributable to equity owners in the three months ending September 30 reached Dh2.27 billion compared with Dh1.66bn a year earlier, the company said in a statement to the Dubai bourse, where its shares are traded.
Three analysts polled by Bloomberg had forecast an average net profit of Dh1.94bn.
Operating income for the period rose 9.7 per cent to Dh3.96bn from Dh3.61bn, while net impairment loss on financial assets shrank by 40.8 per cent to Dh431.3 million from Dh728.6m, reported for the third quarter of 2016.
“Margins have continued to improve throughout 2017, helped by rate rises and an improvement in funding costs,” Emirates NBD’s group chief executive Shayne Nelson said. “We continue to extend our international branch network and, following the opening of the branch in India, work continues on opening three more branches in Saudi Arabia.”
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Customer loans stood at Dh304.1bn at the close of the third quarter, a 5 per cent rise from the end of 2016 level, while customer deposits climbed 4 per cent to Dh322bn from the end of last year.
Total assets reached Dh461.1bn at the end of the third quarter, up 3 per cent from the end of 2016 level.
“We achieved a record performance for the first nine months of 2017 as we delivered positive jaws with higher income and lower expenses,” said group chief financial officer Surya Subramanian. “The bank is well placed to meet various accounting and regulatory changes that take effect in 2018 and we do not expect any material impact as a result.”
The bank's net interest margins also improved to 2.56 per cent in the third quarter, compared with 2.44 per cent a year earlier, thanks to higher interest rates and lower funding costs as the liquidity crunch eased.
“Net interest margin continues to widen and the pace of improvement was better than expected,” said Shabbir Malik, an analyst at Egyptian investment bank EFG-Hermes based in Dubai. He added that lower provisioning was behind the results beating their forecast for third-quarter net profit.
Emirates NBD said it expects net interest margins this year to range between 2.45 and 2.5 per cent and improve in the next quarter because of recent interest rate hikes and cheaper funding.
Net interest income climbed 10 per cent to Dh2.80bn, while non-interest income rose 9 per cent to Dh1.16bn.
“Increasing customer-based fee income from treasury sales, trade finance and cash management remains a strategic priority for wholesale banking,” Emirates NBD said.
