Emirates NBD reported net profit of AED2,134 million for 4Q2015, +27.6% Q-o-Q and +74.0% Y-o-Y. The bank’s earnings were well ahead of our AED1,656 million estimate and Bloomberg consensus of AED1,447 million. ENBD announced a cash dividend of AED0.40 /share (pay-out ratio 34%), which is below our AED0.45/share estimate.   Main positives: i) Spreads were stable Q-o-Q at 2.72%; ii) Provisioning surprised positively (cost of risk dropped to 73bps from 115 bps in 3Q2015); iii) Loan growth was relatively strong (+3.4% Q-o-Q and +10.0% Y-o-Y)   Main negatives: i) Operating costs were higher-than-expected; ii) CASA deposits were down 2.4% Q-o-Q   Our view of the results: Overall, a good set of results. Earnings topped our expectations on the back of i) provision write-backs and recoveries; and ii) one-off gain in other income. The underlying trends of loan growth, spreads and credit quality were encouraging. Spreads remained resilient despite system-wide liquidity pressure. The bank’s deposit growth outpaced loan growth; however, the growth was driven by term deposits as ENBD’s CASA deposits shrunk slightly by 2.4% Q-o-Q. That said, the bank’s CASA mix continues to be healthy at 55%. Loan growth was relatively strong at 3.4% Q-o-Q, underpinned by growth in the Islamic segment (+6.5% Q-o-Q). ENBD’s credit quality metrics remain robust (NPL coverage at 112%, GP reserve at 2.79%) and cost of risk dropped to 73bps in 4Q2015 from 115bps in 3Q2015. While the dividend pay-out is slightly weaker-than-expected, we believe the improving trend in provisions is quite reassuring. We believe ENBD offers scope for lower provisions in 2016e and it is well-positioned to benefit from higher US interest rates and lifting of Iran sanctions. We reiterate our Buy rating on the stock. ENBD trades at 2016e P/BV of c1.0x. (Earnings release, Shabbir Malik, Murad Ansari)   Emirates NBD: AED6.44 as of 17 January 2016, Rating: Buy, FV: AED11.00 per share, MCap: USD9,753 million, EMIRATES UH / ENBD.DU