Emirates NBD, UAE's biggest bank by assets said its first quarter profit rose 27 percent, on the back of a stake sale of its card processing unit.
Net profit for the quarter ended March 31 was AED1.41bn ($385m), compared to AED1.1bn in the same period last year, the Dubai government-controlled bank said in a statement on Tuesday.
During the quarter, Network International, a card processing unit of Emirates NBD sold its 49 percent stake to private equity firm Abraaj Capital for a price of $539m, which included a sum contingent upon attainment of profitability targets and a portion financed by Emirates NBD, as is normal in such transactions.
“As a result of this transaction, Network International was accounted for as a jointly controlled entity from the start of 2011 and a gain on the transaction of AED1.8bn was recognised during Q1 2011,” Emirates NBD said.
The bank’s Earnings per Share (EPS) increased 29 percent to AED0.24 per share, from AED0.19 per share in the first quarter of 2010.
However, other indicators showed a slowdown - customer loans slipping one percent during the quarter from the fourth quarter of 2010 - while the bank’s deposits grew six percent from the end of 2010.
The bank’s impairment allowances on financial assets and on loans showed an increase, standing at AED2.8bn at the end of March, increasing by AED628m during the first quarter.
“During the first quarter of 2011 we have continued to deliver stable and robust financial results. The quarter witnessed the formalisation of the Network International transaction and the resultant gain demonstrates the value we are able to create and realise for our shareholders, Emirates NBD’s chief executive officer, Rick Pudner, said in the statement.
"From an operational perspective, the quarter has importantly seen a return to top-line growth across both net interest and core fee income categories.”
Customer deposits at the UAE’s 51 banks have risen 2.8 percent this year through February to AED1.1 trillion ($294bn), compared with a 6.8 percent rise in 2010, Bloomberg reported earlier this month, citing central bank data.
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