Emirates NBD, the biggest lender in Dubai, said its first-quarter net profit rose 8 per cent as income from fees rose and bad debts reduced.
The profit rose to AED1.8bn ($490.5m) in the three-month period ending 31 March, which compared with AED1.67bn in the same period in 2015, the bank said in a statement to the Dubai Financial Market (DFM), where its shares are traded.
The first-quarter impairment allowances dropped to AED829m from AED1.08bn in the first three months of 2015. Credit quality also improved as the impaired loan ratio declined to 6.9 per cent from 7.1 per cent reported in the first quarter of last year, while impaired loan coverage ratio also strengthened to 113.5 per cent. Emirates NBD said its advances to deposit ratio at 95.9 per cent remains comfortably within the managements target range.
Despite challenging conditions in the market, the lender has issued AED2bn of term debt through private placements at competitive pricing, which boosted structural liquidity.
Emirates NBD is in the process of reorganising its business lines to control costs and improve profitability. It has already closed down operations of its subsidiary Emirates Money, a spokesman of the bank confirmed to MEED on 19 April.
As part of our ongoing business review to enhance overall cost and operational efficiencies, we have decided to integrate Emirates Money into Emirates NBD, the spokesman said in a statement.
Emirates Moneys small- and medium-sized enterprise (SME) portfolio is being migrated to Emirates NBD and the existing Emirates Money SME customers will be served through the banks business banking unit.
Emirates Money offered services such as business and property finance and loans against assets including gold and deposits to improve business cash flows for smaller commercial entities. Its portfolio also included retail offerings including insurance, credit cards, personal loans, new and used vehicle and equipment finance, according to its website.
Emirates Money, which employed more than 370 employees before closure, has cut more than 100 jobs, a source familiar with the matter said. Another banking source aware of the situation, however, said the layoffs could be twice as many, potentially taking the total number of employees made redundant this year across Emirates NBD Group subsidiaries to more than 400.
The spokesman declined to comment on layoffs.
Emirates NBDs sharia-compliant arm, Emirates Islamic (EI), earlier this year slashed about 200 jobs as part of a wider organisational restructuring, sources familiar with the situation told MEED.
We remain cautiously optimistic for the remainder of 2016, but are conscious of the headwinds that a strong dollar and volatile oil price can present, Shayne Nelson, the banks CEO said in the statement to the DFM.