Emirates NBD Q1 net profit down 55pc
Dubai, April 25, 2012
Emirates NBD, a leading bank in the region, said its net profit for the first quarter in 2012 was down 55 per cent to Dh641 million ($174.5 million) compared to the same period last year.
The bank had made a profit of Dh1.413 billion in Q1 last year, aided by a Dh1.835 billion one-off gain from the stake sale of Network International.
Announcing the results for the quarter ended March 31, the Dubai lender said its total income increased by 19 per cent to Dh2.68 billion compared to Dh2.26 billion the previous year and grew by 8 per cent compared to Dh2.49 billion over the last quarter.
Compared to the fourth quarter of 2011, Emirates NBD said its net profit more than tripled due to the improved operating performance witnessed during the current quarter and the absence of further impairments on associates and investment properties.
The bank's net interest income for the quarter improved by 8 per cent to Dh1.77 billion from Dh1.64 billion during the same period the previous year but declined by 8 per cent compared to Dh1.92 billion in Q4 2011 driven primarily by a normalisation of the net interest margin to 2.63 per cent from 2.85 per cent in the previous quarter, said a statement from Emirates NBD.
The expected reduction in the net interest margin arose primarily from loans re-pricing to lower Eibor rates and from the negative mix impact of an improved funding profile, the statement added.
According to the Dubai lender, the non-interest income recorded a year-on-year increase of 49 per cent to Dh909 million in Q1 2012.
Although the improvement was aided by higher positive income on investment securities and the absence of write-downs on investment properties, core fee income also grew strongly by 17 per cent and 14 per cent compared to last year and Q4 2011 respectively, driven by increased foreign exchange income and a pickup in trade finance activity, it added.
The total costs in first quarter amounted to Dh942 million, an improvement of 8 per cent over the previous quarter resulting from lower non-staff costs.
As a result, the cost to income ratio for Q1 2012 of 35.1 per cent improved relative to 41.1 per cent reported in Q4 2011, the bank said.
Commenting on the Group’s performance, Emirates NBD chief executive officer Rick Pudner, said: “During the first quarter of 2012 we have continued to deliver stable and robust financial results, reflecting the strength of our business model and cementing our position as the region’s leading banking group.'
'Whilst uncertainties and challenges remain in the global economic environment, we remain confident about the strength and capabilities of Emirates NBD to continue to realise more success and our ability to capitalise on value-adding opportunities for our shareholders,' he noted.
The customer loans as of March 31 2012 (including Islamic financing) were broadly stable compared with end-2011 levels at Dh204.1 billion, while customer deposits witnessed a surge of 8 per cent to hit Dh208.5 billion over last quarter, said the official.
According to him, the loan to deposit ratio improved in Q1 2012 to 98 per cent from 105 per cent at the end of 2011.
Chief financial officer Surya Subramanian said the operating performance for the first quarter had been particularly strong as evidenced by the acceleration of top-line growth while at the same time showing improved operating efficiency relative to the previous quarter.
The bank, he said, has also continued to optimise its balance sheet during the quarter through its focus on growth in stable low-cost deposits and the issuance of more than Dh7 billion in medium term liabilities.
The contribution of the Bank’s investments in associates and joint ventures during Q1 2012 amounted to Dh24 million compared to negative contributions of Dh477 million and Dh228 million in Q1 2011 and Q4 2011 respectively.
The negative contribution in comparative quarters was principally driven by the impairments recognised on the Bank’s investment in Union Properties during those quarters. Further impairments on the investment in Union Properties were not required in Q1 2012 as the Bank is comfortable with the current book value of Dh532 million, he pointed out.
On the 2012 outlook, Pudner said, 'During the first quarter the UAE economy has continued to display resilience to global uncertainty, underpinned by a continued increase in oil output and strength in the trade, logistics, tourism and retail sales sectors. Nevertheless, the external environment remains challenging and the Bank maintains its cautious outlook.'
'However, Emirates NBD’s capitalisation, liquidity and operating profitability remain extremely strong offering both resilience and flexibility for the future. In addition, the Bank has a clear strategy in place to further enhance shareholder returns and take advantage of the selected growth opportunities,' said Pudner.
'This strategy is built around further optimisation of the balance sheet and capital allocation; driving income growth and profitability through key account planning, cross-selling and customer service enhancement initiatives; enhancement of platforms; and measured investment in key growth areas,' he added.-TradeArabia News Service