* Q3 net profit 1.66 bln dhs vs 1.67 bln dhs yr-ago
* Analysts' forecast - 1.88 bln dhs
* Net interest income dips 2 pct, non-interest income up 5
(Adds official Q3 calaculation, detail, context)
By Tom Arnold
DUBAI, Oct 17 Dubai's largest lender, Emirates
NBD (ENBD), reported a slightly lower-than-expected
third-quarter net profit as net interest income slipped and
The quarter marked an end to 16 straight quarters of a rise
in earnings for the bank, as net profit dropped 1 percent,
signaling the fallout from a growth slowdown in Dubai's economy.
The lender's earnings also took a hit from additional
provisions set aside for Emirates Islamic, its
sharia-compliant arm, to cover bad loans in the small- and
medium-sized enterprise sector.
The bank made a net profit of 1.66 billion dirhams ($452
million) in the three months to Sept. 30, compared with 1.67
billion dirhams a year earlier, according to financial
Three analysts on average forecast the bank would make a net
profit of 1.88 billion dirhams for the quarter.
Net interest income fell 2 percent in the third quarter
from a year earlier due to higher cost of fixed deposits and
wholesale funding, the bank said.
Costs rose 8 percent in the quarter as the bank invested
more in its businesses late last year in anticipation of higher
volumes, the lender said in an investor presentation. However,
it said the growth had since been "contained" in light of the
"new economic reality."
The bank, which has close ties to the Dubai government, has
experienced an improvement in its asset quality since a debt
crisis and property crash in Dubai at the end of the last
That trend continued during the quarter as its
non-performing loans ratio, which reached a peak of 14.3 percent
in 2012, fell to 6.4 percent during the third quarter.
Performance was also boosted by a 5 percent climb in
non-interest income due to higher core fee income and a 11
percent drop in provisions, helped by further writebacks and
recoveries on bad debt, it said.
The bank, 55.6-percent owned by state fund Investment Corp
of Dubai, reported a net profit of 5.38 billion dirhams for the
first nine months of 2016, up from 4.99 billion dirhams in the
same period a year earlier.
The bank and its subsidiaries have adjusted to slower growth
in the local economy. Emirates Islamic has laid off around 300
people this year and made around 100 people redundant from
($1 = 3.6726 UAE dirham)
(Editing by William Maclean and Amrutha Gayathri)