Emirates NBD's third quarter profit surges 90 per cent

Bottom line boosted by sales of Network International stake and purchase of Turkey's Denizbank

Emirates NBD on Monday reported a 24 per cent decline in its first quarter net income. Pawan Singh / The National

Emirates NBD, Dubai’s largest lender by assets, reported a 90 per cent increase in net profit year-on-year for the third quarter of 2019, on the back of partial disposal of its Network International shares.

Net profit in the three months ending September 30 rose to Dh5 billion, the lender said in a statement to the Dubai Financial Market, where its shares trade. The figure includes one-off gains worth Dh2.3bnfrom the sale of a stake in payments processor Network International and a Dh141.5 million gain on its purchase of Turkey's Denizbank.

“Emirates NBD delivered a strong set of results in the first nine months of 2019. The bank successfully completed the acquisition of DenizBank in the third quarter of 2019," said Emirates NBD vice chairman and managing director Hesham Abdulla Al Qassim.

"This represents a significant milestone for Emirates NBD, expanding our presence to 13 countries and establishing Emirates NBD as a leading Bank in the MENAT region with over 14 million customers," he added.

Net profit for the nine-month period was up 63 per cent Dh12.48bn, bolstered by a total of Dh4.39bn worth of gains made on stake sales in Network International, which listed on the London Stock Exchange in April. The lender also benefited from a 20 per cent increase in operating income, which surged 20 per cent year-on-year to Dh15.5bn as its loan book grew 36 per cent during the first nine months and fee income grew 26 per cent year-on-year on higher foreign exchange and credit card revenue.

Earlier this month, Emirates NBD announced plans to raise Dh6.45 billion via a rights issue to "ensure that the bank’s capital base provides a strong foundation to embrace controlled growth in the coming years", group chief executive Shayne Nelson said in a statement.

The rights issue is an offer to Emirates NBD shareholders allowing them to subscribe for new shares at a reduced issue price of Dh8.50 per share. Each right allows its holder to subscribe for one new share, with each stock holding the same rights as existing shares. The issue opens on November 10 and closes on November 20, the lender said.

The issue of more shares allows the bank to bolster its balance sheet following its purchase of Denizbank from Russia's Sberbank. It agreed to pay 15.48 billion Turkish lira (Dh9.66bn) for a 99.85 per cent stake in the bank, which is Turkey's fifth-largest lender, with 749 branches and close to 14,000 employees.

"With the inclusion of DenizBank, total income grew 20 per cent in the first nine months, helped by 17 per cent growth in net interest income and a 31 per cent improvement in non-interest income," said Surya Subramanian, group chief financial officer at Emirates NBD.

Last month, the bank also raised the foreign ownership limit of its stocks to 20 per cent from 5 per cent and said it planned to double the ratio to 40 per cent in the future.