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Lower impairments drive Emirates NBD FY'18 profit up 20% YOY

Emirates NBD Bank PJSC saw a 20% year-over-year increase in its 2018 profit, helped by a decline in impairment losses.

The Dubai-based lender reported full-year 2018 consolidated group profit attributable to equity holders of 10.04 billion United Arab Emirates dirhams, up from the year-ago 8.35 billion dirhams. EPS for the full year was 1.70 dirhams, compared to 1.40 dirhams a year earlier. Return on tangible equity was 22.1%, compared to 20.2% in 2017.

Net interest income rose on a yearly basis to 10.93 billion dirhams from 8.96 billion dirhams, so did net income from Islamic financing and investment products, to 1.95 billion dirhams from 1.83 billion dirhams.

Net fee and commission income slipped to 2.86 billion dirhams from 2.96 billion dirhams a year earlier. Net gains on trading securities also decreased, to 53.5 million dirhams from the year-ago 142.9 million dirhams.

The bank booked net impairment loss on financial assets of 1.75 billion dirhams in 2018, down 22% from a year earlier helped by recoveries from legacy loans. General and administrative expenses increased on yearly basis to 5.62 billion dirhams from 4.84 billion dirhams, driven by higher staff and IT costs stemming from the lender's digital transformation as well as its international branch expansion.

Emirates NBD's impaired loan ratio was 5.9% as of 2018-end, compared to 6.2% as of 2017-end. Its impaired loan coverage ratio increased over the period to 127.3% from 124.5%.

As of Dec. 31, 2018, the bank's common equity Tier 1 ratio stood at 16.6%, up from 15.6% at the end of 2017.

Chairman Sheikh Ahmed Bin Saeed al-Maktoum said the bank's board is proposing a cash dividend of 40 fils per share for 2018.

As of Jan. 15, US$1 was equivalent to 3.67 United Arab Emirates dirhams.