July 18, 2018 / 5:20 AM / a month ago

Emirates NBD Q2 profit surges 30 pct as net interest income rises

DUBAI, July 18 (Reuters) - Emirates NBD (ENBD), Dubai’s largest lender, posted a 30 percent rise in second-quarter net profit on Wednesday, boosted by a climb in net interest income and a drop in provisions to cover bad loans.

The bank made a net profit of 2.63 billion dirhams ($716.1 million) in the three months to June 30, it said in a statement, compared with 2.02 billion dirhams in the corresponding period of 2017.

That was ahead of two analysts’ forecasts. SICO Bahrain forecast the bank would make a net profit for the quarter of 2.31 billion dirhams, while EFG Hermes expected a profit of 2.14 billion dirhams.

Banks in the United Arab Emirates are expected to benefit this year as economic growth recovers and investment in infrastructure picks up ahead of Dubai’s hosting of the World Expo in 2020.

Emirates NBD, 55.6-percent owned by state fund Investment Corp, was boosted by a 20 percent rise in net interest income to 3.25 billion dirhams compared with the same period a year earlier.

That helped offset a 3 percent dip in non-interest income to 1.10 billion dirhams as income from investment securities dropped.

Reflecting improved economic conditions, provisions for bad loans eased by 49 percent to 315 million dirhams.

With existing overseas operations in several countries including Egypt, India, Saudi Arabia, Singapore, Britain, Indonesia and China, Emirates NBD expanded its international operations in May by agreeing to buy Turkey’s Denizbank from Russia’s state-owned Sberbank for $3.2 billion.

The bank said a 21 percent increase in costs during the quarter was due to higher staff and IT costs related to its digital and technology transformation, as well as higher costs related to international branch expansion.

The bank’s loan and deposit portfolio increased marginally at the end of June. Loans rose by 4 percent to 316.4 billion dirhams, while deposits increased by 3 percent 335 billion dirhams.

$1 = 3.6728 UAE dirham Editing by Amrutha Gayathri

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