Emirates NBD's revenue growth outstripped another significant hike in bad loans
Emirates NBD, Dubai's largest lender, on Thursday posted a 34.8 percent jump in second-quarter net profit, beating analysts' forecasts as revenue growth outstripped another significant hike in loan impairments.
The lender, 55.6-percent owned by state fund Investment Corp of Dubai, made a net profit of AED1.31 billion ($357 million) in the three months to June 30, Reuters calculated, compared to AED972 million in the same period last year.
An average of six analysts polled by Reuters had forecast a net profit of AED1.09 billion for the second quarter.
ENBD didn't provide a quarterly breakdown in its first-half results filing, so Reuters calculated figures for the three months to June 30 using previous financial statements.
The bank's earnings performance has been boosted in recent quarters by improved economic conditions in Dubai, which has recovered from a deep financial crisis on the back of a rebound in the key real estate sector.
Impairments, which have been a major drag on the bank's profitability, have stayed high although chief executive Shayne Nelson said in April that the buoyant local economy would allow it to keep boosting profits and its bad loan coverage ratios without the need for severe provisioning.
Despite this, provisioning remained elevated in the second quarter, climbing 34.4 percent year-on-year to AED1.34 billion, according to Reuters calculations.
The bank's bad loans coverage ratio improved to 64.7 percent at end-June, the statement said, up from 52.7 percent at the same point of 2013 and 4 percentage points higher than the figure at the end of the first quarter.
ENBD was still able to post a big rise in profits as both net interest income and non-interest income grew - 21.6 percent to AED2.33 billion and 46 percent to AED1.47 billion respectively, according to Reuters calculations.
Total loans stood at AED241.8 billion at the end of June, up 1.4 percent on the end of 2013. Deposits increased 5.5 percent over the same timeframe, standing at AED252.9 billion on June 30.