(MENAFN- Khaleej Times) Emirates NBD, a leading Dubai-based lender, announced on Tuesday record net profit of Dh8.35 billion in 2017, up 15 per cent, on the back of a surge in net interest income, control on expenses and reduced provisions.
The bank announced a dividend of 40 fils per share, and said its balance sheet continued to strengthen with further improvements in capital and liquidity and stable credit quality.
Net interest income improved seven per cent due to loan growth and the positive impact of recent rate rises while total income surged by five per cent to Dh15.5 billion and total assets rose five per cent to Dh470.4 billion.
Sheikh Ahmed bin Saeed Al Maktoum, Chairman, Emirates NBD, said 2017 marked a successful year for Emirates NBD as the bank achieved a record annual net profit. "We continued to advance Emirates NBD's digital capabilities and are honoured to be named the Official Banking Partner for Expo 2020 Dubai where we will play a key role in ensuring that banking services at Expo 2020 Dubai are at the forefront of innovation."
Sheikh Ahmed said the bank had dedicated its 2017 Corporate Social Responsibility activities to the UAE's Year of Giving initiative and successfully exceeded its targets. "In 2018, we will align our CSR activities and strategy to the Year of Zayed initiative to honour the legacy of our nation's founding father."
"As a leading bank in the region and a front-runner in digital banking innovation with a strong balance sheet, we are well placed to take advantage of growth opportunities in our preferred markets. In light of the solid performance, we are proposing a cash dividend at 40 fils per share," said Sheikh Ahmed.
The bank said its expects the UAE's growth rate to accelerate to 3.4 per cent in 2018 from an estimated 2.0 per cent last year. "The slowdown in 2017 was primarily due to oil production cuts and crude output should recover this year. Non-oil sector growth will be underpinned by investment in infrastructure as the country prepares for Expo 2020, with the public sector driving this investment."
The lender noted that in 2018 household consumption is likely to be constrained against a backdrop of modest job and wage growth, higher taxes and increased fuel costs. "VAT is being introduced at a time when the economy is in relatively good shape and able to absorb its impact."
Hesham Abdulla Al Qassim, Vice Chairman and Managing Director, Emirates NBD, said the bank opened its first branch in India in 2017 and would continue to expand its international presence in 2018, by growing branch network in Egypt and Saudi Arabia and opening a representative office in Turkey.
"We are confident that our prudent business model shall continue to deliver a solid performance and deal with the opportunities and challenges that will present themselves," said Al Qassim.
Group Chief Executive Officer, Shayne Nelson said the surge in net profit was underpinned by higher income, a control on expenses and a lower cost of risk. Margins widened 22 bps in 2017, helped by rate rises and improved funding costs. The Group's balance sheet continued to strengthen, with further improvements in capital and liquidity and a stable credit quality profile.
"We made good progress in advancing our digital agenda and are pleased to be named Most Innovative Financial Services Organisation of the Year at the BAI Global Innovations Awards forum. As part of the Bank's efforts to drive further innovation, I am delighted to announce our partnership with Motive Partners to launch Motive Labs, an innovation and investment accelerator to pioneer digital transformation across the financial services industry." Non-interest income increased one per cent during the year as higher foreign exchange and derivative income offset lower income from the sale of properties. Costs for the year ended 31 December 2017 amounted to Dh4.844 billion, an improvement of one per cent over the previous year, helped by containment in staff costs.
Impaired loan ratio improved by 0.2 per cent to 6.2 per cent. The impairment charge during this period of Dh2.23 billion is 15 per cent lower than in 2016 as the net cost of risk improved. This net provision includes Dh1.78 billion of write-backs and recoveries.
Loans and deposits both grew by five per cent. The advances to deposits ratio remains comfortably within management's target range at 93.1 per cent and the Liquidity Coverage Ratio is at a healthy 146 per cent. During 2017, the bank raised Dh10.2 billion of term funding through a mix of public issues and private placements with maturities out to twenty years. Term funding represents 11 per cent of total liabilities.-
Issac John Associate Business Editor of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.
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