Dubai: Emirates NBD on Wednesday reported Dh1.87 billion net profits for the first quarter of 2017 up 4 per cent year on year.
The operating performance was helped by a control on expenses and lower provisions.
“Emirates NBD made an encouraging start to the year with a 4 per cent growth in net profit and further strengthened its balance sheet, with improvements in credit quality and liquidity, coupled with strong capital ratios,” said Hesham Abdulla Al Qassim, Vice Chairman and Managing Director of Emirates NBD.
Total income for the quarter amounted to Dh3.61 billion; an increase of 4 per cent compared with Dh3.46 billion in the preceding quarter. Net interest income improved 1 per cent over the preceding quarter due to loan growth coupled with an improvement in margins.
Costs for the first quarter of 2017 amounted to Dh1.1 billion, an improvement of 11per cent over the previous year, helped by a reduction in staff costs following cost control measures implemented in 2016. Costs have now declined for 5 consecutive quarters. The cost to income ratio improved by 1.1 per cent year on year to 30.9 per cent, enabling us to invest to support future growth.
During the quarter, the impaired loan ratio improved by 0.1 per cent to 6.3 per cent. The impairment charge in the first quarter of Dh639 million is 23 per cent lower than in the same quarter last year as the net cost of risk improved. This net provision includes Dh364 million of write-backs and recoveries, and together helped boost the coverage ratio to 122.5 per cent.
“Emirates NBD delivered a solid set of results in the first quarter of 2017, underpinned by a control on expenses and an improved cost of risk. The Group’s liquidity position remained strong and we are focused on improving margins by enhancing our funding base,” said Group Chief Executive Officer, Shayne Nelson.
Loans increased by 2 per cent and deposits grew by 3 per cent during the quarter.
The advances to deposits ratio remains comfortably within management’s target range at 92.5 per cent. In the first quarter the bank raised Dh 3.3 billion of term funding through private placements and term funding represents 10 per cent of total liabilities.
Core gross fee income increased 7 per cent year on year on the back of higher income from forex and rates. Net interest margin improved during the quarter as rate rises flowed into loan yields and funding pressures receded.
“The operating performance for the first quarter of 2017 was pleasing as we saw margins improve compared to the fourth quarter 0f 2016. This margin increase is due to an improvement in funding costs coupled with loan pricing benefiting from rising interest rates,” said Group Chief Financial Officer, Surya Subramanian
As at 31 March 2017, the bank’s capital adequacy ratio and Tier 1 capital ratio were 20.2 per cent and 17.8 per cent respectively.
