| Kippreport.com

Dubai Lender ENBD's Q1 Profit Beats Forecasts

April 25, 2012 2:48 by kippreport

Emirates NBD reported a forecast-beating first-quarter net profit as a near 50-percent rise in non-interest income and lower impairments boosted profitability.

The lender, 55.6-percent owned by the Investment Corporation of Dubai, has seen profits hit in recent quarters in the wake of continuing debt workouts by state-linked entities in the emirate.

On Wednesday, it posted a first-quarter net profit of 641 million dirhams ($174.51 million), down from 1.4 billion dirhams in the prior-year period, which was due to a one-off gain on the stake sale of payment solutions provider Network International.

Two analysts polled by Reuters had expected the Dubai lender to make a net profit of 565 million dirhams and 570 million dirhams for the first three months of 2012.

Net profit more than tripled compared with the fourth quarter of 2011.

Non-interest income jumped nearly 50 percent year-on-year to 909 million dirhams in the first quarter, a company statement said, helped by a 17 percent increase in core fee income from the first quarter of 2011.

Impairments fell to 1.1 billion dirhams in the quarter, from 1.4 billion in the prior-year period, but rose slightly from end-December due to specific provisions in the bank’s corporate portfolio, as well as an increase in provision allowances, the statement said.

At the government’s behest, the bank was asked to absorb Dubai Bank in October after the debt-laden Islamic bank had to be rescued by the authorities. ENBD was given cash by the United Arab Emirates’ federal government and guarantees by Dubai to help it integrate the business.

Aiming to cut costs, ENBD also planned to lay off 15 percent of its 8,000-strong workforce, sources toldReuters last month.

(Reporting by Rachna Uppal; Editing by Dinesh Nair)

Tags: Banking, Dubai, enbd, finances, Q1 net profit