x Abu Dhabi, UAEWednesday 26 July 2017

Profits hit three-year low at UAE's biggest bank

Markets Update: Emirates NBD suffers its worst quarter since the start of the financial crisis as impairments on bad debts soar.

Dubai - April 12, 2010 - A man enters this branch of Emirates NBD bank on Sheikh Zayed Road in Dubai April 12, 2010.  STOCK (Photo by Jeff Topping/The National)
Dubai - April 12, 2010 - A man enters this branch of Emirates NBD bank on Sheikh Zayed Road in Dubai April 12, 2010. STOCK (Photo by Jeff Topping/The National)

Emirates NBD's profits plunged to their lowest level since 2008 as bad debts continued to mount around the UAE's biggest bank.

The Dubai-based lender reported a 58.7 per cent drop in profits for the third quarter to Dh174.8m after writeoffs for bad debts soared, reaching their highest level since the global financial crisis began.

The earnings, the lowest quarterly profit since 2008, fell far short of analysts' expectations of Dh781m.

Rick Pudner, the bank's chief executive, said the lower profits were a result of efforts taken by the bank to protect itself against financial headwinds.

"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," he said.

But many analysts had hoped that this quarter would see a turnaround in earnings for UAE lenders as banks scaled back provisions.

Emirates NBD reported a 26.5 per cent increase in net impairments on financial assets to Dh1.57bn as it took a "more conservative stance on recognition of impaired loans and provisioning to ensure Emirates NBD is strongly positioned for the future."

Emirates NBD has now fully provided for the estimated impact of Dubai Holding, a conglomerate owned by Dubai's ruler which is currently restructuring its debts, the bank said.

"During Q3 2011 the group has included in its impaired loans and impairment allowances the full estimated impact of the Dubai Holdings restructurings, while the impact of the Dubai World restructuring was already accounted for in 2010."

The results do not include the takeover of Dubai Bank, announced earlier this month, which will be completed by the end of this year.