Monday 30, October 2017 by Nabilah Annuar

Emirates NBD reports a 15 per cent profit for the third quarter

Net profit of AED 6.17 billion up 15 per cent on higher net interest income, lower costs and provisions.

Emirates NBD has recorded a net profit up 15 per cent to AED 6.17 billion for the first nine months of 2017. Net interest income improved by four per cent in Q3-17 YTD to AED 7,991 million due to loan growth and a sustained improvement in margins. Net interest margins improved since the beginning of the year as loans reset at higher rates coupled with lower funding costs as liquidity conditions eased.

Non-interest income declined six per cent compared to the same period in 2016 due to the lower gains from the sale of investment securities and a downward revaluation of illiquid inventory. However core fee income grew 3 per cent due to higher income from foreign exchange.

Costs for the nine months ended 30 September 2017 amounted to AED 3,522 million, an improvement of five per cent over the previous year, helped by a containment in staff costs following cost control measures implemented in 2016. Other costs increased due to a mixture of factors, including an increase in marketing spend and higher IT costs as signalled earlier.

During the first nine months of 2017 the Impaired Loan Ratio improved by 0.3 per cent to 6.1 per cent. The impairment charge during this period of AED 1,692 million is 23 per cent lower than in the corresponding period in 2016. This net provision includes AED 1,052 million of write-backs and recoveries, and together helped boost the coverage ratio to 124.9 per cent.

Net profit for the Group was AED 6,170 million in the first nine months of 2017, 15 per cent above that posted during the same period in 2016. The increase in net profit was driven by asset growth, a control on expenses and reduced provisions.

Loans increased by five per cent and Deposits grew by four per cent during the first nine months of 2017. The Advances to Deposits Ratio remains comfortably within management’s target range at 94.4 per cent and the Liquidity Coverage Ratio is at a healthy 139.1 per cent. During the first nine months of 2017, the Bank raised AED 6.9 billion of term funding through private placements and a ten-year Australian Dollar public deal. Term funding represents 10 per cent of total liabilities. 

As at 30 September 2017, the Bank’s capital adequacy ratio and Tier 1 capital ratio were 21.2 per cent and 18.8 per cent respectively. Total income for the nine months ended 30 September 2017 amounted to AED 11,419 million; an increase of one per cent compared with AED 11,285 million during the same period in 2016.

Commenting on these numbers, Hesham Abdulla Al Qassim, Vice Chairman and Managing Director, Emirates NBD said, “I am very pleased that Emirates NBD has delivered a strong performance in the first nine months of 2017. Our strong financial and operating performance was recognised when Emirates NBD was named 'Banking Company of the Year' by Gulf Business for the second consecutive year. We continue to expand our international presence with our first branch in India which will enable us to better support our customers. Our 2017 CSR activities, embracing the Year of Giving, support various social and environmental opportunities which contribute to the communities we serve, including initiatives to help transform Dubai into one of the world’s most disability-friendly cities by 2020.”

Sharing similar sentiments, Group Chief Executive Officer, Shayne Nelson added, “Emirates NBD delivered a strong set of results with net profit of AED 6.17 billion for the first nine months of 2017, up 15 per cent year-on-year. Margins have continued to improve throughout 2017, helped by rate rises and an improvement in funding costs. We are delighted to be recognised as the Most Innovative Financial Services organisation of the Year at the BAI Global Innovation Awards forum. Our planned AED 1 billion investment underlines our commitment to retain Emirates NBD's leadership position and to support the UAE as a driver of Digital innovation. We continue to extend our international branch network and, following the opening of the branch in India, work continues on opening three more branches in the Kingdom of Saudi Arabia.”

Group Chief Financial Officer, Surya Subramanian also noted that, “We achieved a record performance for the first nine months of 2017 as we delivered positive jaws with higher income and lower expenses. With CASA representing 57 per cent of deposits, our book is positioned to benefit from expected rate rises. Expenses remain firmly under control and provide headroom to invest for future growth and to help deliver our digital aspirations. The Bank is well placed to meet various accounting and regulatory changes that take effect in 2018 and we do not expect any material impact as a result.”