Result Update report on Emirates NBD. (Global PDF)

Emirates NBD (ENBD) announced its 1H09 results, reporting a net profit of AED2,111mn (EPS: 38fils). The results exhibit decline of 20%YoY in profitability while QoQ growth also declined by 32%. Even though, the net interest income (NII) of the bank declined by 11%QoQ, the rise in it on a yearly basis was significant, evident from a 33%YoY increase over 1H08. Growth in interest earning assets was slow but positive and that combined with improving spreads led to a coupling effect, pushing the NII to exhibit buoyancy. As per our calculations, ENBD’s net interest margin (NIM) grew by 42bps from 2.6% in 1H08 to 3.1% in 1H09. Increasing NIMs were seen in most banks for 1H09, driven by favourable repricing of loans. It is interesting to note that, ENBD’s NIM dropped on a QoQ basis, by a hefty 42bps from 3.3% in 1Q09 to 2.9% in 2Q09, driven by reduced differential between US$ LIBOR and EIBOR and due to upward pressure in the cost of deposits. Growth in earning assets remained slow (10%YoY and 6.6%YTD) due to controlled lending carried out by the bank amidst challenging times.