First-half profit of Dubai lender Emirates NBD increases 30% to Dh2.35bn

Revenue from retail customers and Islamic finance pushes Emirates NBD profit higher in the first half.

Emirates NBD's net income increased to Dh2.35 billion in the first half. Jeff Topping / The National

Emirates NBD, Dubai’s biggest lender, said its second quarter profit increased 34 per cent as a booming economy spurred growth at its retail banking and Islamic finance divisions and operating costs were reduced. Net income increased to Dh1.3 billion in the second quarter compared to Dh972 million a year earlier. Customer loans advanced 1 per cent to Dh241 .8bn at the end of June, while deposits rose 6 per cent to Dh252.9bn in the first half.

“This is driven by strong growth in both net interest income and non-interest income coupled with a firm control on expenses,” said Shayne Nelson, the bank’s chief executive. “I have focused management efforts on balance sheet optimisation, diversification of income, addressing the legacy NPL [non-performing loans] position, improved capital efficiency and stronger liquidity.”

UAE banks have been one of the biggest beneficiaries of the country’s economic resurgence, which started in earnest last year as government spending on infrastructure, an uptick in trade and tourism and safe haven inflows of capital from politically unstable parts of the region all conspired to trigger profits at private enterprises. The resulting boost in consumer confidence and record low interest rates have propelled a flow of loans from banks as individuals and corporations borrow to finance everything from real estate to factory equipment.

Last year economic growth exceeded 4 per cent and real estate and equity prices recovered from years of stagnation in the aftermath of the financial crisis of 2008.

Emirates NBD, which has the biggest branch network in the UAE, said that its income from its retail banking and wealth management division grew 15 per cent in the first half to Dh2.79bn as it focused on deepening relationships with clients and found ways to sell them more products as well as making banking easier through smartphones and the internet. The bank said that some 28 per cent of its customers use online and mobile banking.

Elsewhere, Dubai Islamic Bank, the biggest Islamic bank in the UAE, said its second-quarter income gained 59.6 per cent to Dh667.5m versus Dh418.2m a year earlier amid an expansion into other Islamic countries such as Indonesia, where there is demand for their services.

“The bank’s expansion plans go well beyond the established and growing franchise and we hope to have the Indonesian and Kenyan operations ready for launch this year,” said Adnan Chilwan, DIB’s chief executive.

In the neighbouring emirate of Sharjah, the Bank of Sharjah said its net income increased 6 per cent in the first half to Dh152m from Dh144m in the same period the previous year as loans gained 8 per cent to Dh13.95bn. The bank said it was affected by the downturn in the UAE equity market during the second quarter but expected to recover from it by year-end.

UAE equities entered a bear market in June after more than doubling in value in the previous 12 months. Analysts attributed the steep decline, which was followed by a rebound, to the prevalence of buying stocks with borrowed money.

“We have all along warned against the consequences of margin trading on the UAE nascent financial market in the absence of market makers or institutional investors and sophisticated investors,” said Ahmed Al Noman, the bank’s chairman.

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