Emirates NBD profit up 6%; provisions surge 56%

Dubai-based lender Emirates NBD on Wednesday announced a six per cent increase in its 2011 net profits to Dh2.5 billion compared with Dh2.34bn in 2010.

The bank’s total revenues inched up  two per cent to Dh9.93bn in 2011, compared with Dh9.72bn in the previous year.

However, its impairment allowances – or the money that the bank sets aside to cover bad loans – shot up by 56 per cent to Dh4.98bn in 2011 compared with Dh3.19bn in 2010. The bank said in a statement that these results include the financial results for Dubai Bank, which it acquired in October 2011, but that the takeover did not impact Emirates NBD’s net profit or non-performing loans ratio as on the date of acquisition.

“These financial results reflect a positive and strong operational performance and demonstrate the strength and resilience of Emirates NBD,” said HH Sheikh Ahmed bin Saeed Al Maktoum, Chairman of Emirates NBD.

In a media statement, he added: “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 on course to realise its vision to be the leading and one of the largest and most successful banks in the region.”

The chairman said that Emirates NBD’s 2011 acquisition of Dubai Bank bears rich opportunities for both banks. “The year also witnessed the acquisition of Dubai Bank by Emirates NBD, which signals a new phase rich in opportunities for Emirates NBD and Dubai Bank while reflecting the Government’s flexibility in dealing with economic variables,” he said.

In line with market trends, Emirates NBD’s customer loans grew just 4 per cent to Dh203.1bn in 2011, while customer deposits shrunk 3.35 per cent to Dh193.3bn for the year. Despite a decline in its deposits, Emirates NBD’s capital adequacy ratio strengthened to what the bank termed as “an extremely healthy level” of 20.5 per cent, up from 19.8 per cent in 2010.

“During 2011 we have delivered a robust set of financial results with net profits for the year up 6 per cent, despite an extremely challenging and volatile external environment and after adopting a significantly more conservative approach to de-risking the balance sheet,” said CEO Rick Pudner.

“While the economic backdrop remains challenging, our successful execution towards our strategic imperatives and strong levels of  capitalisation and liquidity position the Bank strongly to take advantage of selected growth opportunities in the future,” he added.

“The bank has continued to deliver strong levels of operating profitability during 2011 and has demonstrated both resilience and flexibility in the face of rapidly changing market dynamics. This has importantly resulted in a return to top line revenue growth across both interest and core fee income categories,” added CFO Surya Subramanian.

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