(MENAFN - Khaleej Times) Emirates NBD, the biggest UAE bank by assets, announced on Monday "positive and resilient operating performance" with pre-impairment operating profit reaching Dh5 billion for the first nine months of 2011 and Dh1.8 billion for the third quarter, the highest quarterly level this year.
The bank's net profit for the nine-month period was Dh2.3 billion, up 20 per cent compared with the same 2010 period. Earnings per share for the period went up 23 per cent to Dh0.38, the bank said in a statement. Portfolio impairment allowances increased by Dh1.5 billion taking the total allowance to Dh3.7 billion as the bank announced that it would take a more conservative stance on recognition of impaired loans and provisioning to ensure it is strongly positioned for the future.
"These financial results reflect a positive and strong operational performance and demonstrate the strength and resilience of Emirates NBD. 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 well-placed to realise its vision to be the leading and one of the largest and most successful banks in the region," said Shaikh Ahmed bin Saeed Al Maktoum, chairman of Emirates NBD.
The bank's chief executive officer, Rick Pudner, said despite adopting a more conservative approach to de-risking the balance sheet the bank could deliver a robust set of financial results with net profits for the period up 20 per cent. In the third quarter, in comparison with the same 2010 period, net profit dropped by 59 per cent to Dh175 million as impairment allowances rose to Dh1.57 billion compared with Dh1.24 billion last year. The bank said increased provisions for bad loans could hit results in the fourth quarter.
Surya Subramanian, chief financial officer at Emirates NBD, said at a conference call the fourth-quarter outlook could be a repeat of the third-quarter. But he pointed out that in 2011 third quarter, the bank achieved the highest level of operating profit over the previous four quarters. Following the announcement of the results, the bank's shares fell to Dh3.54, its lowest level in more than six months. The bank, which recently took over cash-strapped Dubai Bank, said it has a non-performing loans ratio of 13 per cent to 14 per cent this year and expects an annual one-percentage point increase over the next two years.
Pudner said the result "only reflects the progress made by the bank in addressing the challenges posed during the last few years but also demonstrates our ability to take advantage of gradually improving economic conditions and to deliver on a clear strategic course."
"While the outlook has become more cautious and uncertain, our strong levels of capitalisation and liquidity offer both resilience and flexibility for the future and an ability to take advantage of selected growth opportunities."
The bank's total income for the nine months ended amounted to Dh7.439 billion, broadly stable compared with Dh7.459 billion in the same period of 2010. Total income for the third quarter increased by one per cent from both the same 2010 period and second quarter 2011 levels to Dh2.605 billion.
Net interest income for the nine improved by three per cent to Dh5.329 billion from Dh5.175 billion in 2010.
Customer loans, including Islamic financing, amounted to Dh196.4 billion and was maintained at similar levels to end-2010. Customer deposits were Dh83.6 billion, a decline of eight per cent relative to the customer deposit base as at December 31, 2010. The bank's total capital adequacy ratio and Tier 1 capital ratio have continued to strengthen to 21.1 per cent and 13.4 per cent as at September 31, from 20.1 per cent and 12.8 per cent respectively at the end of 2010.