Dubai’s biggest banks beat profit estimates

Dubai • Emirates NBD PJSC and Dubai Islamic Bank PJSC reported their second-quarter profit that beat analyst estimates as rising construction activity in Dubai helped boost lending at the emirate’s two biggest banks.

Lenders in the Persian Gulf business hub are getting a lift from increased building work in preparation for Expo 2020, as well as by higher interest rates. Economic growth in the United Arab Emirates (UAE) is expected to accelerate to 2.5% this year from 0.5% last year, according to the median of 10 economist estimates, as oil prices rebound and the government boosts spending on infrastructure.

Net income at Emirates NBD advanced 30% to 2.63 billion dirhams (RM2.91 billion), ahead of the mean estimate of two analysts of 2.22 billion dirhams. Profit at Dubai Islamic Bank climbed 14% to 1.21 billion dirhams, compared to analyst estimates of 1.09 billion dirhams, according to data compiled by Bloomberg.

Wider margins, an improvement in provisions and a 20% surge during the quarter in the income Emirates NBD makes from lending contributed to the profit increase, CEO Shayne Nelson said in a statement last Wednesday. Measured on a six-monthly basis earnings were at a record, the CEO said.

Emirates NBD in May agreed to buy Turkey’s Denizbank AS from Russia’s Sberbank for US$3.2 billion (RM12.99 billion) as part of a plan to diversify its presence. The lender has a US$21.3 million equity investment in theAbraaj Group, the Dubai-based private equity company that’s being restructured, and US$17.6 million invested across three Abraaj funds, it said earlier this month.

Dubai Islamic Bank “will soon reveal a new direction and an expansionary agenda for the bank which will largely revolve around digitalisation, directed squarely at changing the way customers interact across the organisation with two simple aims — greater efficiency, higher returns”, CEO Adnan Chilwan said in a statement. “The recent capital increase has once again created capacity for further growth.”

Emirates NBD currently has 227 branches and 1,065 automated teller machines and scalable deposit modules in the UAE and overseas and a large social media following.

Dubai Islamic Bank currently operates 90 branches across the UAE, is present in seven markets worldwide and is expanding its global footprint to further grow and develop the industry —Bloomberg