The Dubai-listed Emirates NBD said it posted record earnings last year as it made more money from businesses other than loans and shrugged off a collapse in the price of oil during the fourth quarter.
The bank's profit in the fourth quarter of 2014 increased 82 per cent to Dh1.22 billion from Dh672.8 million in the same period last year, while for the whole of last year net income increased 58 per cent to Dh5.13bn from Dh3.25bn in 2013.
The bank, which has the biggest branch network in the country, said that it has also been given a boost by Dubai World's debt restructuring plan, which will decrease its percentage of bad loans.
Dubai World, the government- owned holding company, said last week that a majority of its creditors had agreed to a US$14.6bn debt restructuring deal that would involve early repayment of some debt and delay repayment of some others.
"This [growth] is driven by strong growth in both net interest income and non-interest income," said Hesham Abdulla Al Qassim, the vice president at Emirates NBD. "It is important to note that each part of the business delivered year-on-year revenue growth. In light of the continued positive news on Dubai World the bank was able to reclassify this exposure as performing."
Growth in Emirates NBD non-interest businesses such as asset management, brokerage and trade finance rose at a higher pace than interest income.
Non-interest income increased 33 per cent last year to Dh4.94bn, driven by gains in businesses including trade finance, foreign exchange income, and asset management. Meanwhile, interest income advanced 17 per cent to Dh9.49bn last year, the bank said.
As a result of this performance, the bank has recommended an increase in 2014 dividend payment to 35 fils per share from 25 fils in 2013.
Banks in the UAE have been the biggest beneficiaries of an economic resurgence that propelled GDP growth to more than 4 per cent last year as corporations and individuals took bank loans for everything from refinancing old debt to new homes and cars. But because interest rates are low, this has meant banks – of which there are more than 50 servicing a population of 9 million in the UAE – have had to vie for clients and search for other ways to make money apart from the interest they get on loans.
Looking forward, Emirates NBD said that while it had reduced its 2015 economic growth forecast for the UAE to 4.3 per cent from 4.8 per cent, it was still counting on aspects of the non-oil economy, such as manufacturing, transport, logistics, construction and tourism to bolster growth.
The UAE is the world's eight largest producer of crude and the federal government relies on it to finance more than 60 per cent of its budget. Since June, the commodity had shed almost 60 per cent of its value amid a supply glut triggered by increased production from countries such as the US and a decrease in demand from emerging markets such as China.
"We expect UAE banks to show resilience, with limited reliance on government deposits," said Jaap Meijer, the head of financial services research at Arqaam Capital, a Dubai-based investment bank. "We have only moderately reduced our growth expectations, given that public sector budgets do not contain austerity, and revenue enhancing measures remain contained."
Elsewhere, Mashreq, the lender controlled by its billionaire chief executive, Abdul Aziz Al Ghurair, said its net profit increased by 33 per cent to Dh2.4bn in 2014, a record for the lender.
Separately, Mr Al Ghurair confirmed that Mashreq was interested in acquiring the Egyptian operations of Citibank.
mkassem@thenational.ae
Follow The National's Business section on Twitter
