Emirates NBD 2016 profit beats estimates on lower impairments

Emirates NBD PJSC reported full year profit for 2016 that beat estimates as the United Arab Emirates’ biggest bank benefited from lower impairments. Net income rose 2 per cent to AED 7.24 billion ($1.97 billion) from a year earlier as impairments dropped 23 per cent to AED 2.6 billion, the lender said in a statement to the city’s bourse on Monday. The bank’s operating profit was helped by recoveries from impaired loans which offset lower non-interest income. The mean estimate of eight analysts was for a profit of AED 6.78 billion. “Given the ongoing challenging environment, we will remain focused on controlling expenses and managing risks whilst ensuring that we continue to invest to support future growth,” Chief Executive Officer Shayne Nelson said in the statement. Oil’s plunge over the past two years is forcing countries such as the UAE to cut state spending, tap reserves and combine some of their largest banks to reduce costs. Total income fell 3 per cent to AED 14.7 billion, mainly due to lower non-interest income and a drop in net interest margins. The bank said it expects net interest margins for this year to be in the 2.35 per cent to 2.45 per cent range compared with 2.51 per cent in 2016, while the cost-to-income ratio will be about 33 per cent, down from 33.1 per cent last year. The bank plans to open three additional branches in Saudi Arabia and its first branch in India after being granted permission, it said. (Matthew Martin/Bloomberg)