Emirates NBD PJSC, the United Arab Emirates’ biggest bank by assets, may need to set aside as much as 8 billion dirhams ($2.2 billion) by the end of 2013 to cover for bad loans, Goldman Sachs Group Inc (GS) said. The shares dropped.
“Looking at the guidance provided on asset quality trends, we calculate a provisioning range of 6 billion dirhams and 8 billion dirhams is required between the fourth-quarter of 2011 and the fourth-quarter of 2013,” analysts including Waleed Mohsin and Ali Shekofti wrote in a report dated today.
Emirates NBD is one of the biggest creditors to Dubai World, one of the emirate’s three main state-owned holding companies that reached a deal in March to delay payments on $25 billion of loans. It is also a key lender to units of Dubai Holding LLC, one of whose investment companies is in talks with banks to reschedule at least $10 billion of liabilities. The bank in October took over the unprofitable Dubai Bank on orders from the emirate’s ruler.
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