Dubai's Emirates NBD posts 18% rise in Q1 profit, higher rates to help

Arab World Materials 21 April 2022 12:50 (UTC +04:00)
Dubai's Emirates NBD posts 18% rise in Q1 profit, higher rates to help

Dubai's biggest lender, Emirates NBD, posted a rise of 18% in quarterly net profit as impairment allowances fell sharply on economic recovery from the pandemic, while higher interest rates boosted its net interest rate margin, Trend reports with reference to Reuters.

The bank said it raised its net interest margin guidance by 15 basis points and is well-positioned for an expected rise in interest rates.

Net profit of 2.7 billion dirhams ($735.17 million) in the period ended March 31 was up from 2.3 billion dirhams in the corresponding period a year earlier, the bank said in a statement.

EFG Hermes Research had projected net profit of 2.47 billion dirhams.

Impairments fell by a fifth to 1.4 billion dirhams, reflecting last year's improving operating environment after the pandemic.

Net interest income, the core figure for the banking sector, rose 4% from a year earlier, helped by a higher net interest rate margin. It is also benefiting from low cost of funds, while loans grew 1%, fuelled by strong retail lending.

The UAE central bank, like most in the Gulf, raised its main interest rates by a quarter percentage point last month, in lockstep with the U.S. Federal Reserve as it began a monetary tightening cycle.

Emirates NBD is also expected to improve non-interest income from a spate of initial public offerings in Dubai, which kicked off with a key role in the $6.1 billion IPO of utility DEWA, the region's biggest IPO since Saudi Aramco in 2019.

"These strong results, along with the positive outlook for margins, enable us to invest in our international network and digital capabilities, supporting our next stage of growth," group chief executive Shayne Nelson said in a statement.