Emirates NBD, the UAE’s largest bank by assets, has declared a 40 per cent drop in its first-half net profits for the year 2012.
In a statement posted on the Dubai Financial Market website, where it is listed, the bank said: “Net profit for the group was Dh1.289 billion for H1 2012, 40 per cent below the profit posted in H1 2011 of Dh2.157 billion as the comparative period was aided by a Dh1.813 billion gain on the stake sale of Network International.”
Excluding last year’s non-recurring gain on subsidiaries, however, the bank’s half-yearly profits surged a whopping 274 per cent, it said. In the statement, the bank reported “H1 2012 net profit of Dh1.3 billion, up 274 per cent compared with Dh0.3 billion in H1 2011 after excluding the Dh1.8 billion non-recurring gain on subsidiaries.”
The bank reported an improvement of 2 per cent in customer loans and 8 per cent in customer deposits during H1 2012, as compared with year-end 2011, it said in the statement. Emirates NBD’s CEO Rick Pudner attributed this growth to the bank’s focus on its “strategic priorities”, which he said was bearing fruit.
“During the first half of 2012, we have delivered a robust set of financial results with pre-impairment operating profits for the period up 5 per cent, despite a continued challenging external environment. In addition, the progress we have made towards our strategic priorities is now bearing fruit as growth momentum in our retail and Islamic banking franchises is evidently gathering pace, while the strategy transformation activity in our wholesale banking business is set to reap future benefits,” Pudner said in the statement.
“The operating performance for the first half of 2012 has been strong despite challenges to top-line growth and has been supported by a sustained cost optimisation initiative, reporting declining operating costs over the last two quarters,” said Surya Subramanian, the bank’s CFO. “The bank has also continued to maintain conservatism in de-risking its balance sheet and further optimised its balance sheet during the period through its focus on growth in stable low-cost deposits and the issuance of almost Dh9 billion in medium-term liabilities,” he added.
Non-performing loans across the bank’s corporate, retail and Islamic financing portfolios increased by 0.5 per cent during the first six months of 2012 to end the period at 14.3 per cent, said the bank, adding that this increase was “within previously expected levels”.
“The impairment charge in respect of H1 2012 improved to Dh2.055 billion compared with Dh2.350 billion in H1 2011,” the bank noted in the statement.
This impairment charge was primarily composed of specific provisions made in relation to the bank’s corporate and Islamic financing portfolios. As at June 30, 2012, total portfolio impairment allowances amount to Dh3.7 billion or 2.5 per cent of unclassified credit risk weighted assets, in excess of the UAE Central Bank requirement of 1.5 per cent by Dh1.5 billion.