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Tue 19 Apr 2016 09:30 AM

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Emirates NBD Q1 net profit up 8%

The first major lender in the UAE to announce its earnings said it made a net profit of $492.8 million

Emirates NBD Q1 net profit up 8%

Emirates NBD (ENBD), Dubai's largest lender, posted an 8 percent rise in first-quarter net profit on Tuesday, aided by smaller provisions for bad loans.

The first major lender in the UAE to announce its earnings said it made a net profit of 1.81 billion dirhams ($492.8 million) in the three months to March 31, a statement from the bank said, compared to 1.67 billion dirhams in the corresponding period of 2015.

Analysts at EFG Hermes and SICO Bahrain had forecast the bank would make a net profit for the quarter of 1.87 billion dirhams and 1.93 billion dirhams respectively.

The bank, 55.6 percent owned by state fund Investment Corp of Dubai, has benefited from an improvement in the performance of its assets in recent quarters as Dubai government-linked companies have made progress in resolving debt troubles which hamstrung the emirate at the turn of the decade.

The amount of cash set aside for bad loans was 829 million dirhams in the first quarter, down from 1.1 billion dirhams in the same period of 2015.

A 3 percent increase in net interest income to 2.56 billion dirhams was also a positive for the bank and helped to offset a 16 percent jump in operating expenses, which ENBD said was due to higher staffing costs linked with increase business volumes.

As the bank with the closest ties to the Dubai government, ENBD's performance is heavily linked to the fortunes of the emirate's economy. This has been showing signs of strain in recent months as volatility in financial markets and low oil prices weigh on sentiment.

Reflecting the tougher operating conditions, the bank forecast in January that loan growth would slip to a mid-single digit percentage in 2016, from 10 percent in 2015.

However, loans and advances stood at 279.1 billion dirhams at the end of March, up 12 percent at the same point last year. Deposits rose by the same percentage year-on-year, to 290.9 billion dirhams.

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