Dubai’s ENBD beats estimates
The city's largest bank has dropped its profits on cost in its second quarter, beating estimated forecasts.
July 23, 2012 11:01 by Reuters
Emirates NBD, Dubai’s largest bank by market value, on Monday said quarterly profit fell 13 percent due to higher costs linked to its Dubai Bank merger, although the earnings still beat analysts forecasts.
The lender, 55.6-percent held by state-owned Investment Corporation of Dubai, said it had net profit of 647 million dirhams ($176.1 million) in the three months to June 30. That is down from 744 million dirhams in the same period last year.
Analysts forecast average profit of 632.2 million dirhams, according to a Reuters poll.
Total costs rose 8 percent in the quarter to 894 million dirhams, which the bank attributed to the impact of Dubai Bank’s integration. Without it, costs fell 4 percent compared to the prior-year period.
ENBD took over Dubai Bank in October 2011, at the behest of Dubai’s ruler, after the lender needed a government rescue under the weight of impaired assets.
Provisions fell for the second straight quarter after hitting the bank’s top line heavily in the last six months of 2011.ENBD’s second quarter impairments were 954 million dirhams, down from 981 million dirhams in the second quarter last year.
Profit for the first six months of 2012 dropped 40 percent over the same period last year to 1.3 billion dirhams,ENBD said. The 2011 figure of 2.2 billion dirhams was boosted by a one-off gain from the sale of a stake in payment solutions provider Network International.
Operating profit for the first six months of the year climbed 52 percent, fuelled by a 22 percent jump in non-interest income over the period. The bank credited the rise higher banking fee income, a pickup in trade finance activity and increased foreign exchange and rates income.
Second quarter operating profit fell 15 percent to 651 million dirhams. Non-interest income climbed by 2 percent in the second quarter, year-on-year.
Loans and advances gained 2 percent from Dec. 30, 2011 levels, in the wake of flat growth in the first quarter. Deposits rose 8 percent versus the end of 2011.
Lending in the wider United Arab Emirates’ banking system only grew by 0.3 percent in the first five months of the year, according to the latest figures from the country’s central bank.
Shares in ENBD have fallen 8.2 percent year-to-date, compared to the main Dubai index which has gained 12 percent. ($1 = 3.6730 UAE dirhams) (Reporting by David French; Editing by Amran Abocar)