DUBAI: UAE lender Emirates NBD posted a 27 percent rise in first-quarter net profit, boosted by a stake sale of one of its units.
The bank, the third largest by market value in the UAE, said on Tuesday it made a net profit of 1.4 billion dirhams ($381 million) in the three months to March 31.
The average forecast of seven analysts' estimates on the bank's website was for 1.04 billion dirhams.
"The bottom line number is extremely high but it is interesting that they have used the profit from Network International to offset writedowns from Union Properties and improvement of portfolio provisions," said Raj Madha, analyst at Rasmala Investment.
"Looks like a significant amount of balance sheet clean-up but there is no growth -- this might be a little disappointing, but we were expecting minimal growth."
The bank said it made a gain of 1.8 billion dirhams from the sale of a 49 percent stake in payment solutions provider Network International to private equity firm Abraaj Capital, a sale completed during the quarter.
Loans slipped 1 percent in the period, while impairments on financial assets and on loans continued to increase.
Emirates NBD booked a further 426 million dirhams in impairments on its investment in Union Properties, now valued at 782 million dirhams, the statement said.
Other indicators did not present a very optimistic picture. Customer loans fell 1 percent from the fourth quarter of 2010, while deposits grew a moderate 6 percent from the end of 2010.
Total impairment allowances stood at 2.8 billion dirhams at the end of March, the statement said, increasing by 628 million dirhams during the first quarter.
"Emirates NBD's numbers were disappointing in my opinion, especially the lack of improvement on the provisioning side and slow loan growth," said Sleiman Aboulhosn, assistant fund manager at Al Masah Capital.
Chief Executive Officer Rick Pudner said in March the bank would set aside more money in 2011 to cover bad loans amid further corporate debt restructurings.
"The quarter witnessed the formalisation of the Network International transaction and the resultant gain demonstrates the value we are able to create and realise for our shareholders," Pudner said in the statement on Tuesday.
Banks in the United Arab Emirates were forced to book record provisions for non-performing, or bad, loans in the wake of the global financial crisis, which hurt profitability and constrained lending.
ENBD suffered from heavy exposure to investments in Dubai's battered real estate sector as well as to indebted conglomerate Dubai World which reached a deal to restructure $25 billion of debt last year.
The lender has about 12.9 billion dirhams in debt maturing in the next two years, with 3.8 billion dirhams due in 2011 and just over 8 billion dirhams next year.
ENBD reported sharply higher fourth-quarter profit last month but impairments on non-performing, or bad loans and on investments hit its yearly results.
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