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Emirates NBD's net profit up 27% to Dh3.3b in 2013

January 27, 2014

Babu Das Augustine Deputy Business Editor

Dubai : Emirates NBD, one of the leading banks in the region, on Monday reported strong growth in loans with improved margins that boosted its profits last year. While the bank reported a 27 per cent increase in its net profit year-on-year (y-o-y) to Dh3.3 billion in 2013, for the fourth quarter of the year, profits were up 8 per cent to Dh673 million compared to the same period in 2012. The bank posted strong growth in new underwritings across all business segments, with 10 per cent growth in gross loans in 2013 and 2 per cent growth in the fourth quarter of 2013. Consumer lending was up 26 per cent during the year with growth spread across all areas, including 27 per cent growth in personal loans, 19 per cent increase in mortgages, 25 per cent increase in credit cards and 36 per cent growth in auto loans. The bank's total assets at the close of 2013 were up 11 per cent at Dh342.1 billion compared with Dh308.3 billion at the end of 2012. On the liability side, the bank's customer deposits surged 12 per cent to Dh239.6 billion in 2013 with current and savings account (CASA) surging 39 per cent during the year. CASA deposits as a percentage of total deposits increased to 53 per cent at end of 2013 from 43 per cent at the end of 2012. "As the bank witnessed growth across multiple revenue streams, particularly in the Islamic franchise and retail business, it continued to innovate and deliver a superior customer experience," Shayne Nelson , group CEO of Emirates NBD, said. Rise in income Total income in 2013 was up 16 per cent at Dh11.85 billion compared with Dh10.21 billion in 2012. Net interest income for the year improved by 18 per cent to Dh8.13 billion compared with Dh6.91 billion in 2012. "Over 2013, loan spreads improved as retail volumes increased in this higher yielding business, coupled with increased margins from the Egyptian business and a positive impact from the drop in Emirates interbank offered rates [EIBOR]," Surya Subramanian , group chief financial officer of Emirates NBD, said. Non-interest income improved by 12 per cent to Dh3.7 billion in 2013, driven primarily by an increase in both core banking fee and property-related income. "This year, we have seen a steep change in both total income and pre-provision operating profit due to increased volumes coupled with an improving business mix and a more efficient funding base," Subramanian said. Costs for the year ended 2013 were up 12 per cent at Dh4.1 billion. Excluding cost associated with the Egyptian acquisition, cost increased by 6 per cent. This 6 per cent increase is due to investment in customer service, IT, marketing and communication-related costs. Impairment charges The bank's impairment charges in 2013 were raised to Dh4.71 billion compared with Dh4 billion in 2012. The bank's coverage ratio increased by 2.7 per cent to 57.5 per cent in 2013. For the medium term, the bank targets an impaired loan ratio of 12 per cent and a coverage ratio of 80 per cent. On the back of strong economic growth in Dubai , the bank expects to boost its profitability and strength of its balance sheet. "Emirates NBD has improved its capital and funding profile, allowing it to take advantage of the expected future growth in Dubai and the region. As Dubai recovers, we expect a further positive trend in impaired loans, leading to a stronger balance sheet," Nelson said.

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Source: Gulf News (United Arab Emirates)

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