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Emirates NBD Q1 net profit up 27 pct on stake sale
Q1 net profit 1.4 bln dirhams vs 1.1 bln dirhams; Portfolio impairments grew by 628 mln dirhams in Q1; Gain from sale of Network International 1.8 bln dirhams
April 26, 2011 4:37 by Reuters
Emirates NBD, Dubai’s largest lender by market value, reported a forecast-beating 27 percent rise in first-quarter net profit on Tuesday, after an expected income boost from a stake sale of one of its units.
The bank made a quarterly net profit of 1.4 billion dirhams ($381.2 million) for the three month period to March 31, up from 1.1 billion dirhams in the prior-year period, a company statement to the Dubai bourse said.
The average forecast by 11 analysts on the bank’s website was 1.04 billion dirhams, while three analysts estimated an average first quarter profit of 1.6 bilion dirhams in a Reuters poll.
In December, Emirates NBD agreed to sell a 49 percent stake in payments solutions provider Network International to private equity firm Abraaj Capital for about 2 billion dirhams, a transaction which was completed during the first quarter.
The bank said it booked a gain of 1.8 billion dirhams from the stake sale.
Other indicators did not present a very optimistic picture with customer loans slipping 1 percent during the quarter from the fourth quarter of 2010, while deposits grew a moderate 6 percent from the end of 2010.
At the same time, impairments on financial assets and on loans continued to increase.
Total impairment allowances stood at 2.8 billion dirhams at the end of March, the statement said, increasing by 628 million dirhams during the first quarter.
Chief Executive Officer Rick Pudner said in March the bank would set aside more money in 2011 to cover bad loans amid further corporate debt restructurings.
“The quarter witnessed the formalisation of the Network International transaction and the resultant gain demonstrates the value we are able to create and realise for our shareholders,” Pudner said in the statement on Tuesday.
Banks in the United Arab Emirates were forced to book record provisions for non-performing, or bad, loans in the wake of the global financial crisis, which hurt profitability and constrained lending.
ENBD reported sharply higher fourth-quarter profit last month but impairments on non-performing, or bad loans and on investments hit its yearly results. (Reporting by Rachna Uppal; Editing by Dinesh Nair)