* Emirates NBD is Dubai World's biggest creditor
* Has set aside provisions of 5 pct on more than $2.5 bln
* Says waiting to see more progress by Dubai World
DUBAI, April 24 Emirates NBD, Dubai's biggest bank, will only reverse provisions on its exposure to conglomerate Dubai World after seeing further progress on asset sales and debt repayment, it said on Thursday.
Emirates NBD is Dubai World's biggest creditor with an exposure of more than 9 billion dirhams ($2.5 billion), against which it has set aside provisions of 5 percent.
If that debt is reclassified as performing, it will provide a significant one-off boost to the bank's profits.
Last month, after making only interest payments to its creditors, Dubai World repaid around $280 million of the principal debt to creditors ahead of schedule and an Emirates NBD executive told Reuters the bank was confident it would be able to reclassify the debt, possibly this year.
But on Thursday, the bank's executives said they were approaching the issue conservatively.
"This is encouraging and we will wait to see further progress on this account," Surya Subramanian, Emirates NBD chief financial officer, told reporters.
"As of now, it remains on the stock of impaired loans."
Subramanian did not say when exactly Emirates NBD could make a decision, but said if creditors received further repayments then ENBD would feel "more confident in reassessing the debt positively".
If the bank did reclassify its Dubai World exposure today, he said, this would instantly bring its bad loan coverage ratio to the target level of 80 percent from the current 61 percent.
Dubai World ran into trouble during the emirate's 2009 property market collapse and had to restructure $25 billion of debt, of which about $14.4 billion was owed to around 90 local and foreign banks, and the remainder to the Dubai government.
In recent months, there has been increasing optimism among bankers that the conglomerate will be able to make scheduled payments in its restructuring plan, partly by selling assets.
Mohammed al-Shaibani, chief executive of sovereign wealth fund Investment Corp of Dubai and a key figure in negotiating the emirate's debt restructurings in recent years, told Reuters last month that Dubai World would be able to meet a $4.4 billion loan maturity in May 2015 and expected to make some other repayments early.
Emirates NBD is 55.6 percent owned by Investment Corp of Dubai. (Reporting by Olzhas Auyezov; Editing by Susan Fenton)