Dubai: Emirates NBD, the largest bank in the UAE by total income and branch network, reported a net profit of up Dh3.3 billion for the first half of 2015, up 41 per cent compared to the first six months of 2014.
The bank's subsidiary, Emirates Islamic, has also reported a 97 per cent increase in profit for the same period.
Emirates NBD's strong operating performance was helped by an increase in both net interest income and non-interest income, a modest increase in costs and a lower impairment charge.
Total income for the first half grew by seven per cent to Dh7.6 billion. Net interest income grew nine per cent to Dh5 billion due to growth in retail assets and a lower cost of funds. The improvement in net interest income is attributable to an improved asset mix due to growth of Islamic and retail assets and a lower cost of funds helped by CASA [current and savings accounts] growth, the bank said in a statement.
“We have delivered another strong set of financial results, with healthy levels of growth in both income and profit. Our prudential balance sheet offers protection against future volatility in the global financial markets whilst providing a strong foundation for growth. We remain cautiously optimistic for the remainder of 2015,” said Shayne Nelson, Group Chief Executive Officer of Emirates NBD.
Non-interest income for the period improved by 4 per cent to Dh2.57 billion, driven by increases in foreign exchange, derivative income and higher asset management fees which was partially offset by lower gains from the sale of properties.
Costs for the half year ended 30 June 2015 amounted to Dh2.23 million, a modest increase of 5 per cent over the previous year. The cost to income ratio improved marginally by 0.7 per cent year on year to 29.6 per cent, as income growth outpaced cost growth. Excluding one-offs, the cost to income ratio is 31.7 per cent.
During the first half, the impaired loan ratio improved to 7.4 per cent from 7.9 per cent at the end of 2014. The impairment charge in the first half of 2015 of Dh1.98 billion is 24 per cent lower than in corresponding period of 2014 as the cost of risk starts to normalise in 2015. These provisions, along with a healthy level of write-backs and recoveries, helped boost the coverage ratio to 109.8 per cent.
Loans increased by four per cent and deposits by six per cent during the first half of 2015. Emirates Islamic delivered strong growth, with Islamic financing receivables growing by 17 per cent during first half. The advances to deposits ratio improved to 93.3 per cent from 95.2 per cent at the end of last year.
During the first half of 2015, the bank raised Dh8.9 billion of term-funding. Term liabilities now represent 11 per cent of total liabilities and will help provide a strong cushion to deal with any future uncertainty in the global capital markets for the remainder of 2015.
“We took advantage of favourable market conditions to prudently raise nearly Dh9 billion of term-funding in the first half of 2015. This decision to ‘front load’ our term-funding requirements is paying dividend even as we now see increased volatility in the global capital markets from a range of sources,” said Group Chief Financial Officer, Surya Subramanian.
