Profit hike is due to higher fee income and despite 43% y-o-y jump in provisions
Emirates NBD, Dubai's largest lender, beat
analysts' forecasts on Thursday with a 25 percent jump in first-quarter net
profit as higher interest and fee income outstripped a jump in provisions.
The lender, 55.6 percent owned by state fund
Investment Corp of Dubai, made a net profit of AED1.04bn ($283.7m) in the three
months to March 31, a bourse filing said, compared to AED837m in the same
period last year.
An average of six analysts polled by Reuters
forecast a net profit of AED904.1m for the first quarter.
The bank cited healthy growth in both net interest
income and non-interest income, which climbed 28 percent and 25 percent
respectively, for the rise in profits.
UAE banks in general have recorded impressive
growth in the first quarter, continuing the trend from 2013, as the local
economy rebounds from a real estate crash and debt problems at Dubai
ENBD's first-quarter profit would have been greater
if it were not for the 43 percent year-on-year jump in provisioning.
The bank set aside AED1.27bn in the three months to
March 31 to cover bad loans, which it attributed to continued conservative
provisioning to increase its coverage ratio - which rose to 60.7 percent from
51.4 percent in the year-ago period.
Provisions, which have been a major drag on the
bank's profitability in recent years, have continued to remain high despite the
improving local economy, with earnings in the final quarter of 2013 trimmed by
a 40 percent leap in impairments.
Loans and advances stood at AED239.7bn at the end
of March, up 9 percent on the same point last year. Chief Financial Officer
Surya Subramanian said in January the bank was expecting loan growth of 7-8
percent in 2014.
Meanwhile, deposits increased 13 percent over the
same timeframe, standing at AED251.5bn on March 31.