Dubai: Emirates NBD, the UAE's largest bank by assets, yesterday reported a net profit of Dh2.48 billion for 2011, up six per cent over the Dh2.33 billion in 2010.

While the net interest income for 2011 was up seven per cent core fee income grew seven per cent over the previous year. The year witnessed significant proactive and precautionary de-risking of the balance sheet.

"We have taken a more conservative approach to strengthen the bank's position to meet the challenges reflected in the broader global financial markets and Emirates NBD is on course to realise its vision to be the leading and one of the largest and most successful banks in the region," said Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of Emirates NBD.

The bank suffered a 62 per cent decline in fourth-quarter profit as it boosted provisions for bad loans. Net income declined to Dh152 million from Dh403 million a year earlier. In the fourth quarter provisions rose to Dh1.06 billion, up from Dh201 million in the same quarter of 2010.

The impairment charge for 2011 increased to Dh4.97 billion compared with Dh3.19 billion in 2010.

"During 2011 we delivered a robust set of financial results despite an extremely challenging and volatile external environment and after adopting a significantly more conservative approach to de-risking the balance sheet," said chief executive officer Rick Pudner.

‘Much higher'

Emirates NBD's full year results were within analysts' expectations.

"ENBD's bottom line for the full year was in line with our expectations. Income from forex was down by 25 per cent and varied significantly from our expectations of an increase. Moreover while we expected a loss of Dh59 million from investment properties, the actual was much higher at Dh288 million," said Naveed Ahmad, senior financial analyst of Global Investment House.

Surya Subramanian, Emirates NBD's chief financial officer, said the bank's debt maturity profile for next year was within its funding capabilities and he did not expect further negative contributions from its associates and joint ventures.

In the fourth quarter Emirates NBD consolidated the balance sheet of Dubai Bank, which it acquired in the third quarter. The bank was acquired at a consideration of Dh10 in fair value with zero impact on the profit and loss account of Emirates NBD.

As part of the fair value adjustment Emirates NBD Group received a Dh2.8 billion deposit from the Ministry of Finance at discounted rates comparable to market rates.

Guarantee

This liability was fair value resulting in a fair value gain of Dh543 million.

Additionally, the Government of Dubai has provided a guarantee for any losses at the date of acquisition and any future losses relating to the assets and liabilities on the date of acquisition for the next seven years.

Emirates NBD officials said the Group is in the process of integrating Dubai Bank into Emirates NBD.

"We are exploring the operational synergies between Emirates Islamic Bank and Dubai Bank to integrate the two Islamic banking entities in the group," said Pudner.

However he did not give any target date for the potential merger.