Emirates NBD Boosts 2018 Profit 20%, Beats Estimates

Emirates NBD reported a better-than-expected increase in full-year profit as lending rose and loan loss charges fell at Dubai’s biggest bank.

The state-controlled lender recommended a dividend of 40 fils a share, unchanged from a year ago.

Highlights

• FY net income 10.04 billion dirhams ($2.73 billion) vs 8.35 billion dirhams
• Mean estimate 9.9 billion dirhams (range 9.57 billion – 10.2 billion; Bloomberg data)
• Total income 17.4 billion dirhams vs 15.5 billion dirhams
• Mean estimate 17.4 billion dirhams (range 17 billion dirhams – 17.6 billion dirhams)
• Net interest income 12.9 billion dirhams vs 10.8 billion dirhams
• Non-interest income 4.51 billion dirhams vs 4.67 billion dirhams
• General & administrative expenses 5.62 billion dirhams 4.84 billion dirhams
• Impairment allowances 1.75 billion dirhams vs 2.23 billion dirhams
• Loans 327.9 billion dirhams vs 304.1 billion dirhams
• Deposits 347.9 billion dirhams vs 326.5 billion dirhams
• Net interest margin 2.82 percent vs 2.47 percent
• Impaired loan ratio 5.9 percent vs 6.2 percent

“Margins widened 35 bps in 2018 as rate rises flowed through to the loan book which more than offset a rise in funding costs,” Group Chief Executive Officer Shayne Nelson said. “The group’s balance sheet remains healthy with a further strengthening in capital coupled with strong liquidity and stable credit quality.”

In Depth

Emirates NBD is the United Arab Emirates’ second-biggest bank with assets of $136 billion; top lender is First Abu Dhabi Bank. The bank agreed to buy Turkey’s Denizbank AS last year, for which it is now seeking regulatory approval. It is said to have held off from selling a dollar bond in November as interest rates climbed The bank is rated A3 at Moody’s; A+ at Fitch. All have stable outlooks.

Emirates NBD is the third big regional lender to report results after Qatar National Bank and Bank Muscat, both of which beat estimates for full-year earnings.

Shares

Emirates NBD shares dropped 2.1 percent at close in Dubai on Tuesday Stock advanced 8.4 percent in the past 52 weeks. The Dubai Stock Index lost 29 percent. The shares are down 1 percent in the past 5 days and rose 1.1 percent in the past 30 days.

Emirates NBD trades at 5.2 times its estimated earnings per share for the coming year. The company’s dividend yield is 4.4 percent on a trailing 12-month basis and 4.4 percent based on Bloomberg Dividend Forecasts for the next 12 months.

The analyst consensus one-year price target for the company is AED14.78, for a potential return of 64 percent. Analysts raised the target by 6.7 percent in the past three months.