Interest Income Helps Biggest Dubai Bank Top Profit Estimate

(Bloomberg) -- Emirates NBD PJSC posted a 16 percent increase in third-quarter profit, topping analyst estimates, as the biggest bank in Dubai benefited from higher interest income. The shares climbed.

Net income rose to 2.64 billion dirhams ($719 million) from 2.28 billion dirhams, the Dubai government-controlled bank said in a statement. The mean estimate of four analysts was for as a profit of 2.55 billion dirhams, according to data compiled by Bloomberg. Net interest income rose 18 percent to 3.31 billion dirhams.

“The operating performance for the third quarter of 2018 was satisfying as all business segments delivered a year-on-year increase in both operating income and contribution to group profit," Group Chief Financial Officer Surya Subramanian said. "Margins continued to improve as rate rises flowed through to loan book which more than offset a rise in deposit costs."

"Any benefit from future rate rises may be limited as we have experienced some migration from current account and savings account to fixed deposits," he said.

The shares advanced 2.2 percent at 10:29 a.m. in Dubai, taking their gains this year to 12 percent. That compares with decline of 19 percent for the benchmark Dubai Financial Market General Index for the year.

Key details from income statement:

  • Net interest margin 2.87% vs 2.56%
  • Cost to income ratio 32.9% vs 32.0%
  • Total income 4.45 billion vs 3.97 billion
  • Impairment allowances 353 million vs 431 million
  • Total assets at 492.6 billion, up 5% from end 2017
  • Customer loans at 324.7 billion, up 7% from end 2017
  • Customer deposits at 341.2 billion, up 4% from end 2017
  • Impaired loan ratio at 5.8%, coverage ratio at 127.4%
  • Liquidity coverage ratio at 196.5%
  • Common equity tier 1 ratio at 16.6%; capital adequacy ratio at 21.3%
  • Link to presentation:

More on Emirates NBD:

  • Dubai Bank Said to Weigh Paying Sberbank Less in Turkey Deal (1)
  • The stock fell 4.2 percent in the past month, compared with the 0.7 percent decrease for the company’s Bloomberg peers and the 3.7 percent decline in the Dubai Financial Market General Index
  • The analyst consensus rating is equivalent to buy
  • Emirates NBD trades at 5.5 times trailing 12-month earnings per share and 5.4 times its estimates for the coming year

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