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DUBAI, July 19 (Reuters) - Emirates NBD
The bank, the first major lender from the United Arab Emirates to report its earnings this quarter, made a net profit of 2.02 billion dirhams ($550 million) in the three months to June 30, it said in a statement, compared with 1.91 billion dirhams a year earlier.
Three analysts on average had forecast the bank to post a net profit of 1.88 billion dirhams.
The bank, 55.6-percent owned by state fund Investment Corp, is considered a reliable indicator for the strength of the Dubai economy.
The emirate's economy expanded at a stronger rate during the first half of 2017 compared with a year earlier, buoyed in part by a pick-up in trade and construction activities.
ENBD's net interest income improved 6 percent in the second quarter, with the bank citing loan growth and a higher Emirates Interbank Offered Rate as helping offset a contraction in net interest margins.
Net interest margins reached 2.49 percent, down by 0.06 percent from a year ago but better than the first quarter.
Non-interest income dipped 7 percent due to lower gains from the sale of investment securities.
Costs rose 7 percent as cost-control measures introduced in 2016 had taken effect, it said.
Emirates Islamic, the bank's sharia-compliant arm, laid off around 300 people last year, while ENBD cut around 100 jobs from another subsidiary.
The bank's non-performing loans ratio, which reached a peak of 14.3 percent in 2012 in the wake of a real estate crash and debt crisis in Dubai, improved to 6.1 percent during the quarter.
($1 = 3.6729 UAE dirham)
(Reporting By Tom Arnold; Editing by Hadeel Al Sayegh and Subhranshu Sahu) ((Tom.Arnold@thomsonreuters.com; +97144536265; Reuters Messaging: tom.arnold.thomsonreuters.com@reuters.net))