Emirates NBD shares down

Dubai-based Emirates NBD, the country’s largest bank by assets, today announced a 59 per cent slump in its third quarter net profits to Dh175 million, down from Dh424m in the corresponding quarter last year.

Emirates NBD shares ended the day down 4.6 per cent at Dh3.54 in thin trading after the bank announced its results before the opening of the market today.

In the results announcement posted this morning on the website of the Dubai Financial Market, where the bank is listed, Emirates NBD said the decline in net profits comes despite it achieving the highest level of operating profit over the last four quarters as the bank increased its provisions for Dubai Holding’s restructuring.

“During Q3 2011, the group has included in its impaired loans and impairment allowances the full estimated impact of the Dubai Holdings restructurings, while the impact of the Dubai World restructuring was already accounted for in 2010,” the bank said.

Total impairment allowances by the bank were up 27 per cent for the quarter, from Dh1.24 billion in Q3 2010 to Dh1.57 billion, bringing up the total provisions for the first nine months this year to Dh3.92 billion, up 31 per cent from Dh2.99 billion for the same period last year.

The bank’s pre-impairment operating profit surged to Dh5 billion for the nine-months ended September 30, 2011, and Dh1.8 billion for Q3 2011, the highest quarterly level this year. Net profits for the nine-month period this year stood at Dh2.3 billion, up 20 per cent compared with the same period in 2010.

“We have taken a more conservative approach to strengthen the bank’s position to meet the challenges reflected in the broader global financial markets and Emirates NBD is well-placed to realise its vision to be the leading and one of the largest and most successful banks in the region,” said HH Sheikh Ahmed bin Saeed Al Maktoum, Chairman of Emirates NBD.

“These financial results reflect a positive and strong operational performance and demonstrate the strength and resilience of Emirates NBD,” he added.

“During the first 9 months of 2011, we have delivered a robust set of financial results with net profits for the period up 20 per cent, despite adopting a significantly more conservative approach to de-risking the balance sheet,” said Rick Pudner, the bank’s CEO.

“This not only reflects the progress made by the bank in addressing the challenges posed during the last few years but also demonstrates our ability to take advantage of gradually improving economic conditions and to deliver on a clear strategic course. While the outlook has become more cautious and uncertain, our strong levels of capitalisation and liquidity offer both resilience and flexibility for the future and an ability to take advantage of selected growth opportunities,” he added.

“In the first 9 months of 2011, the bank has continued to deliver strong levels of operating profitability, adjusting rapidly to changing market dynamics through alignment of the various operating levers we have at our disposal. In fact, in Q3 2011 we have achieved the highest level of operating profit over the last four quarters,” said Surya Subramanian, the bank’s CFO.

The results do not include the financial results for Dubai Bank, which Emirates Bank took over recently, as the effective date of takeover occurred after the balance sheet date. “The takeover is not expected to impact Emirates NBD’s net profit or non-performing loans ratio as on the date of acquisition,” the bank said.

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