Emirates NBD (ENBD), Dubai's biggest bank by assets, said its second-quarter profit rose 5.8 per cent, owing to higher loan rates, tighter expenses and lower provision costs.
At the same time the lender said that as a result of cost cuts last year, it would invest Dh1 billion in digital technology over the next three years - a move that is likely to reduce its costs even more.
Net profit increased to Dh2.02bn in the three months ended June versus Dh1.91bn in the same period last year, the bank said on Wednesday. Net interest income rose 6 per cent to Dh2.69bn in the three months ended June compared with Dh2.54bn in the same period last year.
"The operating performance for the first half of 2017 was pleasing as we saw margins improve coupled with controlled loan growth," said Surya Subramanian, the bank's chief financial officer.
"Non-interest income declined year-on-year due to the sale of investment securities in 2016 that were not repeated in the current year. Expenses remain firmly under control and provide headroom to invest for future growth," he said.
Mr Subramanian said he expected that the improvement in credit quality and firming of the lender's non-performing loan ratio would probably hold for the remainder of this year.
Net non-interest income, the money the bank makes from fees and commissions, fell 7 per cent to Dh1.14bn compared with Dh1.22bn in the same period last year.
Net impairment losses, meanwhile, fell by just under 1 per cent to Dh621 million from Dh626m in the same period last year. The bank's impaired loan ratio strengthened, however, at the end of the first half to 6.1 per cent from 6.6 per cent at the end of the first half last year.
Operating expenses improved 7 per cent to Dh1.14bn in the three months ended June compared with Dh1.23bn in the same period last year. The lender said that the decline in expenses was helped by containing staff costs last year.
Three analysts polled by Reuters forecast an average net profit of Dh1.9bn for the bank in the second quarter.
Net profit at ENBD's subsidiary Emirates Islamic, meanwhile, rose 80 per cent year-on-year to Dh165.7m for the second quarter, in spite of a 5.4 per cent fall in income from financing and investing activities.
It saw its impairment bill fall 27 per cent to Dh175m, with profitability also boosted by a 26 per cent drop in personnel expenses to Dh136.4m compared with Dh184.4m in the same period last year.
Dubai Islamic Bank, the emirate’s largest Sharia-compliant lender, said net income rose 13.8 per cent in the second quarter, boosted by growth in financing assets and customer deposits. That came even as impairments more than doubled.
Net profit attributable to owners of the bank increased to Dh1.1bn for the three months to the end of June , compared with Dh929m in the same period last year. Net financing income rose 18 per cent to Dh1.9bn for the quarter, although income from commissions, fees and foreign exchange income fell 7.7 per cent over the same period. Impairment charges rose 156 per cent to Dh187m from Dh73m in the same period the previous year.
The Egyptian investment bank EFG-Hermes forecast a profit of Dh979m for the bank's profit in the second quarter, while Arqaam Capital forecast a profit of Dh928.94m.
What should do investors do now?
What does the S&P 500's new all-time high mean for the average investor?
Should I be euphoric?
No. It's fine to be pleased about hearty returns on your investments. But it's not a good idea to tie your emotions closely to the ups and downs of the stock market. You'll get tired fast. This market moment comes on the heels of last year's nosedive. And it's not the first or last time the stock market will make a dramatic move.
So what happened?
It's more about what happened last year. Many of the concerns that triggered that plunge towards the end of last have largely been quelled. The US and China are slowly moving toward a trade agreement. The Federal Reserve has indicated it likely will not raise rates at all in 2019 after seven recent increases. And those changes, along with some strong earnings reports and broader healthy economic indicators, have fueled some optimism in stock markets.
"The panic in the fourth quarter was based mostly on fears," says Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management Company. "The fundamentals have mostly held up, while the fears have gone away and the fears were based mostly on emotion."
Should I buy? Should I sell?
Maybe. It depends on what your long-term investment plan is. The best advice is usually the same no matter the day — determine your financial goals, make a plan to reach them and stick to it.
"I would encourage (investors) not to overreact to highs, just as I would encourage them not to overreact to the lows of December," Mr Schutte says.
All the same, there are some situations in which you should consider taking action. If you think you can't live through another low like last year, the time to get out is now. If the balance of assets in your portfolio is out of whack thanks to the rise of the stock market, make adjustments. And if you need your money in the next five to 10 years, it shouldn't be in stocks anyhow. But for most people, it's also a good time to just leave things be.
Resist the urge to abandon the diversification of your portfolio, Mr Schutte cautions. It may be tempting to shed other investments that aren't performing as well, such as some international stocks, but diversification is designed to help steady your performance over time.
Will the rally last?
No one knows for sure. But David Bailin, chief investment officer at Citi Private Bank, expects the US market could move up 5 per cent to 7 per cent more over the next nine to 12 months, provided the Fed doesn't raise rates and earnings growth exceeds current expectations. We are in a late cycle market, a period when US equities have historically done very well, but volatility also rises, he says.
"This phase can last six months to several years, but it's important clients remain invested and not try to prematurely position for a contraction of the market," Mr Bailin says. "Doing so would risk missing out on important portfolio returns."
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Wednesday April 24: Abu Dhabi World Professional Jiu-Jitsu Championship, 11am-6pm
Thursday April 25: Abu Dhabi World Professional Jiu-Jitsu Championship, 11am-5pm
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Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Tips to avoid getting scammed
1) Beware of cheques presented late on Thursday
2) Visit an RTA centre to change registration only after receiving payment
3) Be aware of people asking to test drive the car alone
4) Try not to close the sale at night
5) Don't be rushed into a sale
6) Call 901 if you see any suspicious behaviour
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US households add $601bn of debt in 2019
American households borrowed another $601 billion (Dh2.2bn) in 2019, the largest yearly gain since 2007, just before the global financial crisis, according to February data from the New York Federal Reserve Bank.
Fuelled by rising mortgage debt as homebuyers continued to take advantage of low interest rates, the increase last year brought total household debt to a record high, surpassing the previous peak reached in 2008 just before the market crash, according to the report.
Following the 22nd straight quarter of growth, American household debt swelled to $14.15 trillion by the end of 2019, the New York Fed said in its quarterly report.
In the final three months of the year, new home loans jumped to their highest volume since the fourth quarter of 2005, while credit cards and auto loans also added to the increase.
The bad debt load is taking its toll on some households, and the New York Fed warned that more and more credit card borrowers — particularly young people — were falling behind on their payments.
"Younger borrowers, who are disproportionately likely to have credit cards and student loans as their primary form of debt, struggle more than others with on-time repayment," New York Fed researchers said.
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Saturday results
Qatar beat Kuwait by 26 runs
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There are direct flights from Dubai to Sofia with FlyDubai (www.flydubai.com) and Wizz Air (www.wizzair.com), from Dh1,164 and Dh822 return including taxes, respectively.
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