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ENBD income seen higher in 2011 but lower in 2012

By Staff

Emirates NBD, the largest Arab bank by assets, is expected to record higher earnings in 2011 despite an increase in provisions related to Dubai Holdings, according to a Kuwait investment bank.

But the bank’s income is projected to dive in 2012 because of persistent allocations for NPL provisions before it sharply rebounds in profits over the following two years, Global Investment House (GIH) said in a study.

From around Dh2.34 billion in 2010, ENBD’s net profits are forecast to swell to nearly Dh2.56 billion in 2011, the report said.

The increase will be in both net interest and non-interest income although the bank’s operating expenses are projected to have risen through 2011.

The report showed ENBD’s net interest income would rise to around Dh7.13bn in 2011 from Dh6.79bn in 2010 while non-interest income would likely grow to nearly Dh2.57bn from Dh2.26bn.

Operating expenses are expected to have risen to Dh3.63bn from Dh3.14bn while ENBD is also believed to have boosted provisions to about Dh3.63bn last year from Dh3.14bn in 2010.

“ENBD’s bottom-line took a huge hit due to provisions relating to the second entity of Dubai Holding in the third quarter,” GIH said.

“The bank has also offered guidance of the addition of one per cent to NPL ratio each year in 2012 and 2013, which in turn is expected to keep provisions on the higher side than previously expected.”

The report showed ENBD’s net profits are expected to dive to Dh1.9bn in 2012 as provisions swell to around Dh3.79bn.

But it projected the net income to sharply rebound to nearly Dh3.4bn in 2013 and Dh4.44bn in 2014 despite relatively high provisions of nearly Dh3.69bn in 2013 and Dh3.19bn in 2014.

The report showed ENBD’s assets shrank from around Dh286bn at the end of 2010 to Dh272bn at the end of 2011. But it forecast them to rebound to Dh274bn at the end of 2012 and Dh289bn at the end of 2013 before peaking at Dh313bn at the end of 2014.

ENBD, a merger of two Dubai-based banks, was ranked as the largest Arab bank at the start of 2011 in terms of assets, accounting for nearly seven per cent of the combined assets of the region's largest 50 banks.

ENBD became the largest Arab bank after its merger from the National Bank of Dubai and Emirates Bank International.

The figures by the Beirut-based Union of Arab Banks (UAB), which groups more than 450 Arab banks, showed ENBD also topped the list of the largest 50 Arab banks in terms of shareholder equity.

National Commercial Bank (NCB) of Saudi Arabia was the second largest Arab bank by assets, which stood at $72.3bn at the start of 2011.