DUBAI: Emirates NBD, Dubai's largest lender, on Thursday posted a 34.8 percent jump in second-quarter net profit, beating analysts' forecasts despite a significant hike in impairments.
The lender, 55.6-percent owned by state fund Investment Corp of Dubai, made a net profit of 1.31 billion dirhams in the three months to June 30, Reuters calculated, compared to 972 million dirhams in the same period last year.
An average of six analysts polled by Reuters forecast a net profit of 1.09 billion dirhams for the second quarter.
The increase in earnings came despite provisions set aside to cover bad loans jumping 34.4 percent year-on-year to 1.34 billion dirhams, according to Reuters calculations.
ENBD didn't provide a quarterly breakdown in its first-half results filing so Reuters calculated figures for the three months to June 30 using previous financial statements.
The bank's earnings performance has been boosted in recent quarters by improved economic conditions in Dubai, which has recovered from a deep financial crisis on the back of a rebound in the key real estate sector.
Impairments, which have been a major drag on the bank's profitability, have stayed high although chief executive Shayne Nelson said in April that the buoyant local economy would allow it to keep boosting profits and its bad loan coverage ratios without the need for severe provisioning.
Despite this, provisioning remained elevated in the second quarter, climbing 34.4 percent year-on-year to 1.34 billion dirhams, according to Reuters calculations.
The bank's bad loans coverage ratio improved to 64.7 percent at end-June, the statement said, up from 52.7 percent at the same point of 2013 and 4 percentage points higher than the figure at the end of the first quarter.
ENBD was still able to post a big rise in profits as both net interest income and non-interest income grew - 21.6 percent to 2.33 billion dirhams and 46 percent to 1.47 billion dirhams respectively, according to Reuters calculations.
Total loans stood at 241.8 billion dirhams at the end of June, up 1.4 percent on the end of 2013. Deposits increased 5.5 percent over the same timeframe, standing at 252.9 billion dirhams on June 30. (Reuters)