Focus falls on Emirates NBD's earnings report

Emirates NBD prepares to release full-year earnings today, setting analysts speculating on how the UAE's biggest bank will integrate Dubai Bank.

Investors are watching carefully as Emirates NBD prepares to report full-year earnings today, detailing for the first time the impact of its acquisition of Dubai Bank last year.

The UAE's biggest bank by assets faced a difficult third quarter after writing off more than Dh1.5 billion (US$408 million) of bad debts.

The key factor for the bank's full-year earnings would be whether levels of provisioning worsened in the fourth quarter, said Raj Madha, a financial analyst at Rasmala Investment Bank.

"I wouldn't expect the fourth-quarter earnings to be good," he said. "This will be a watershed quarter for the bank."

Analysts' estimates are for quarterly earnings of Dh172m, down 1.6 per cent from a year earlier.

Emirates NBD's takeover of Dubai Bank will be closely scrutinised, analysts said.

"They'll probably need to put in some capital, or Dubai Bank could rely on Emirates NBD's capital to survive," said Shabbir Malik, a financial analyst at EFG-Hermes.

Emirates NBD's share price has fallen 21.5 per cent to Dh2.98 since the takeover was announced in October.

During the same period, the benchmark Dubai Financial Market General Index has risen 10.7 per cent. The bank's shares rose 1 per cent yesterday.

Dubai Bank was rescued by the emirate's Government in May. The Islamic lender is believed to have buckled under the weight of debts owed by its then-largest shareholder, Dubai Group.

Dubai Group, a unit of Dubai Holding, is in the process of restructuring $10bn of liabilities.

How the acquisition fits alongside the loss-making Emirates Islamic Bank will be keenly watched by analysts, with many suspecting a merger of the two.

"We're expecting that there would be further information about the integration of Emirates Islamic Bank and Dubai Bank," Mr Madha said.

Several high-profile departures from Emirates NBD have occurred in the past few weeks as part of a management shake-up initiated by Sheikh Ahmed bin Saeed Al Maktoum,who was appointed chairman in June.

Last week, Emirates NBD announced the resignation of Abdul Wahed Al Fahim, the bank's deputy chief executive.

His departure followed that of Suresh Kumar, the chief executive of the bank's investment banking unit, Emirates NBD Capital, who left a month earlier.

They were joined by John Eldredge, the bank's general manager of global markets and treasury.

The bank is also expected to field questions on its restructuring agreement with Union Properties.