October 30, 2018 / 2:07 PM / 14 days ago

UPDATE 1-Emirates NBD profit rises 16 pct on higher net interest income

(Adds Emirates NBD comment on Turkey deal)

By Tom Arnold

DUBAI, Oct 30 (Reuters) - Emirates NBD (ENBD), Dubai’s largest bank, on Tuesday reported a 16 percent rise in third-quarter net profit, benefiting from a jump in net interest income and a drop in bad loan impairments.

The bank made a net profit of 2.64 billion dirhams ($718.8 million) in the three months to Sept. 30, a statement from the bank said, compared to 2.28 billion dirhams in the corresponding period of 2017.

The results were broadly in line with the average forecast of three analysts polled by Reuters for a net profit of 2.57 billion dirhams.

The bank, 55.6 percent owned by state fund Investment Corp., is the latest United Arab Emirates-based bank to report positive profit growth during the quarter and follows double-digit percentage profit increases at First Abu Dhabi Bank and Dubai Islamic Bank.

Net interest income increased 18 percent from the same quarter of last year, while net interest margins rose to 2.9 percent, which the bank attributed to rate rises feeding through to the loan portfolio. That helped overcome the impact of a 1 percent drop in non-interest income and a 15 percent rise in costs over the same period.

Reflecting an improved outlook for Dubai’s economy, provisions for bad loans fell 18 percent to 353 million dirhams during the quarter.

The bank, which raised a $2 billion three-year loan late last month, said in August it was closely monitoring the situation in Turkey after a plunge in the lira since it acquired Turkey’s Denizbank from Russia’s state-owned Sberbank in a $3.2 billion deal announced in May.

Brokerage Arqaam Capital has said the fall in the lira since the announcement of the deal provided Emirates NBD with an opportunity to reduce the acquisition price and that it expects the deal to close in the fourth quarter.

In its third-quarter results, Emirates NBD said the deal was subject to regulatory approval in Turkey, Austria, Russia, the UAE and other jurisdictions where Denizbank operates.

“The timing of regulatory approval is a function of regulatory requirements and is not within our direct control,” an Emirates NBD spokesperson said in response to a Reuters request for more information on the deal.

“We continue to operate within the terms and conditions of the sale and purchase agreement relating to the Denizbank transaction.”

Emirates NBD’s loans and advances stood at 324.7 billion dirhams at the end of September, up 7 percent since the end of last year. Deposits increased 4 percent over the same period to 341.2 billion dirhams. ($1 = 3.6728 UAE dirham) (Editing by Muralikumar Anantharaman and Jane Merriman)

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