Dubai’s biggest bank shrugs off slow economy as profits surge

Emirates NBD and other banks in the United Arab Emirates benefited from a rise in interest rates in 2018. (Reuters)
Updated 18 April 2019
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Dubai’s biggest bank shrugs off slow economy as profits surge

  • The bank made a net profit of $735.17 million in the three months ended March 31
  • Emirates NBD said a 9 percent increase in costs was due to investments in its digital transformation

DUBAI: Emirates NBD, Dubai’s biggest bank, reported a 15 percent increase in first-quarter profit on Wednesday as overall lending and margins gained.
Both loans and deposits rose as improved margins helped to offset an increase in provisions and operating costs.
The stock closed 0.4 percent lower on Wednesday after gaining more than 18 percent this month.
Monsef Mursi, co-head of research at Cairo-based CI Capital told Arab News that the bank’s bottom line performance had exceeded its estimates by about 4 percent, “underpinned by stronger-than-expected non-interest income growth and lower-than-estimated credit impairment.”
The bank also revealed that Group CFO Surya Subramanian is leaving the lender after almost nine years.
Rising US interest rates have benefited Gulf lenders in countries with currencies pegged to the US dollar as the margins they earn from lending to their customers have improved. Howver a regional economic slowdown and property market distress is showing signs of weighing on the bank sector as bad loan provisions start to tick higher.
A glut of new homes together with lackluster underlying demand is a worry for the banking sector.
Still, Emirates NBD said that it expected economic activity in the UAE to be underpinned this year by higher oil production as well as increased government spending.
First-quarter profit advanced to 2.74 billion dirhams ($747 million) from 2.39 billion dirhams, a year earlier the bank said in a statement.
“The bank’s balance sheet remains strong with an improvement in liquidity and capital ratios and a stable credit quality,” said Emirates NBD CEO Shayne Nelson in a statement.
Emirates NBD could save as much as $700 million in its revised deal to buy Turkey’s Denizbank. The revised deal followed a huge slump in the value of the Turkish lira.
Separately, Commercial bank of Dubai (CBD), one of the smaller lenders in the emirate also shook off economic headwinds, reporting a 22 percent leap in first quarter net profit. CEO Bern van Linder said the increase was underpinned by higher income and lower costs. Like its larger Dubai peer, it also reported a rise in deposits and loans.
 


Alibaba head’s remarks spark debate over China working hours

Updated 19 April 2019
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Alibaba head’s remarks spark debate over China working hours

  • Jack Ma is one of China's richest men and his comments last week brought both condemnation and support as China's more mature economy enters a period of slower growth

BEIJING: Remarks by the head of Chinese online business giant Alibaba that young people should work 12-hour days, six days a week if they want financial success have prompted a public debate over work-life balance in the country.
Jack Ma is one of China’s richest men and his comments last week brought both condemnation and support as China’s more mature economy enters a period of slower growth.
Newspaper People’s Daily, the ruling Communist Party’s mouthpiece, issued an editorial, saying mandatory overtime reflects managerial arrogance and was also impractical and unfair to workers. Online complaints included blaming long work hours for a lower birth rate in the country.
Ma has responded to the criticism by saying work should be a joy and also include time for study, reflection and self-improvement.