Emirates NBD's Q2-2022 net profit rose 42% to AED3.5 billion ($953 million) as an improving operating environment boosted retail lending, Dubai's biggest lender said on Thursday, while its impairments fell substantially.

The effort easily topped analysts' mean estimate of AED2.7 billion, according to data provider Refinitiv.

For H1-2022, the lender said it made a net profit of AED5.3 billion, up 11% YoY, and its highest half year since 2019. Earnings per share rose 14% to 80 fils for H1-22.

Total income was up 23% YoY to AED14.2 billion on improved loan mix and cheaper deposits with higher interest rates feeding through to margins, the bank said in a statement.

Impairment allowances were substantially down 28% YoY "reflecting strong writebacks and recoveries and an improving economic outlook".

According to Patrick Sullivan, Group Chief Financial Officer, the bank grew CASA (current account saving account) balances by AED10 billion in H1, "enabling the group to benefit from interest rates rises".

Following the tightening of interest rates by the UAE central bank, Emirates NBD has raised net interest margin guidance by 50bps. The UAE Central Bank on Wednesday followed the US Federal Reserve  in raising rates by 75bps.

Group company, Emirates Islamic's net profit up 23% YoY to AED701 million on higher income and lower impairment allowances and customer financing grew 11% in H1-22.

(Reporting by Brinda Darasha; editing by Daniel Luiz)