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

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.
 


A sham Qatar deal could have cost ex Barclays exec $64 mln, court hears

Updated 13 min 54 sec ago

A sham Qatar deal could have cost ex Barclays exec $64 mln, court hears

  • Roger Jenkins stood to get 50 mln stg “good leaver” package -lawyer
  • Defense lawyers tell jury SFO case is misconceived, perverse

LONDON: A former top Barclays executive, on trial in London on fraud charges, would have risked a 50 million pound ($64 million) “good leaver” package if he had sought a criminal deal with Qatar during the credit crisis, a court heard on Thursday.
It would have been “lunacy” for Roger Jenkins, one of three men charged with fraud over undisclosed payments to Qatar during emergency fundraisings in 2008, to risk such accrued benefits and a job that had paid him 38 million pounds in 2007 alone, his lawyer told a jury at the Old Bailey criminal court.
The high-profile Serious Fraud Office (SFO) case revolves around how Barclays — one of the few major British banks to survive the credit crisis without direct government aid — raised more than 11 billion pounds ($14 billion) from Qatar and other investors to avert a state bailout as markets roiled.
Prosecutors allege that former top executives lied to the market and other investors by not properly disclosing 322 million pounds paid to Qatar, disguised as “bogus” advisory services agreements (ASAs), in return for around four billion pounds in two fundraisings over 2008.
Jenkins, the former head of the bank’s Middle East business, Tom Kalaris, who ran the wealth division and Richard Boath, a former head of European financial institutions, deny charges of conspiracy to commit fraud by false representation and fraud by false representation.
Lawyers for Jenkins and Kalaris told the jury the case against their clients was misconceived, perverse and illogical and that there was no evidence the ASAs were a sham or fake.
In brief opening speeches before the prosecution continues laying out its case, they alleged the defendants believed the ASAs were genuine agreements to secure lucrative business for Barclays in the Middle East — a region it was keen to exploit.
They said the agreements were side deals during emergency fundraising that June and October that had been approved by internal and external lawyers and cleared by the board.
“The unequivocal, repeated advice was that this was legitimate — providing the ASA was a genuine contract for the provision of benefits to Barclays,” said John Kelsey-Fry, a senior lawyer representing Jenkins.
Jenkins, who will give evidence later, had pursued and won the trust of Sheikh Hamad bin Jassim bin Jabr Al-Thani, the former prime minister of Qatar, and wanted to unseat Credit Suisse as the wealthy, gas-rich Gulf state’s preferred bankers, the jury heard.
Had Jenkins considered a fraudulent deal with Sheikh Hamad, the sheikh might have rung up Barclays bosses and said: “Neither I nor QIA (the sovereign wealth fund) are putting a penny in a bank like yours. I will never do business with you again,” Kelsey-Fry said.
Qatar Holding, part of QIA, invested in Barclays alongside Challenger, Sheikh Hamad’s investment vehicle.
The case against Kalaris, meanwhile, hung on three conversations he had had with Boath on the afternoon of June 11, 2008, that the prosecution had “fundamentally misunderstood,” his lawyer Ian Winter said.
When Kalaris told Boath: “Noone wants to go to jail here” and that lawyers would provide “air cover,” he was trying to ensure that a genuine ASA would be approved by legal experts as a legitimate means of paying Qatar for real value, Winter said.
All three men, aged between 60 and 64, are charged over the June fundraising. Jenkins, alone, also faces charges over the October fundraising.
The trial is scheduled to last around five months. ($1 = 0.7819 pounds)