By Tom Arnold

DUBAI (Reuters) - Emirates NBD, Dubai's largest bank, on Wednesday reported a 10 percent rise in fourth-quarter net profit as loan growth and improved margins offset lower income from investment securities and higher expenses.

The bank, the first United Arab Emirates lender to report quarterly results, made a net profit of 2.39 billion dirhams ($650.7 million) in the three months ended Dec. 31, 2018, compared with 2.18 billion dirhams in the year-ago period.

EFG Hermes forecast a net profit of 2.33 billion dirhams, while SICO had expected the lender to post a profit of 2.51 billion dirhams.

Emirates NBD, which is 55.6 percent owned by state fund Investment Corp., and other banks in the United Arab Emirates benefited from a rise in interest rates in 2018.

The lender's net interest margins surged 34 basis points from the previous year to 2.85 percent as an increase in rates bolstered the loan book and outweighed a rise in deposit costs.

Apart from higher margins, loan growth also helped bolster net interest income by 20 percent during the fourth quarter, while lower income from investment securities meant that non-interest income slipped 8 percent.

However, the bank posted an increase of 14 percent in higher expenditure due to staffing, information technology-related costs, global expansion, the implementation of Value Added Tax, advertising and also Expo 2020 sponsorship.

Impairment allowances for the lender surged 18 percent to 640 million dirhams due to higher cost of risk.

($1 = 3.6728 UAE dirham)

(Editing by Sherry Jacob-Phillips)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)