Emirates Islamic 2Q net income drops 5.3% as impairment charges rise

The bank's first half net profit, however, climbs 39% on tighter cost controls

Emirates Islamic reported a 54 per cent rise in its third quarter net profit. Satish Kumar / The National 

Emirates Islamic, the Sharia-compliant subsidiary of Dubai’s biggest lender Emirates NBD, reported a 5.3 per cent drop in its second quarter net income as charges for impairment of financial assets climbed.

Net profit for the three months ending June 30, dropped to Dh261.9 million, it said in a statement to the Dubai Financial Market, where its shares trade. Net impairment of the lender’s financial assets climbed to Dh135.9m at the end of the second quarter, from Dh41m recorded for the same period in 2018, it added.

The lender’s first half income, however, climbed 39 per cent year-on-year to Dh673m, helped by a tighter control on cost, balance sheet growth, higher funded income and a rise in the bank’s foreign exchange income, it said.

“Our performance is a result of core business growth, with both financing and customer deposits higher compared to end 2018," said Salah Mohammed Amin, chief executive of Emirates Islamic. “Foreign exchange income showed an upward trend, with a growing number of customers availing foreign exchange services … the bank’s balance sheet remains healthy with a further strengthening in capital due to retained earnings, stable credit quality and liquidity.”

Emirates Islamic said total assets reached Dh61.1 billion at the end of June, a 5 per cent rise from the end 2018. Financing and investing receivables also rose 1 per cent from the end of the last year to reach Dh36.6bn.