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Dubai’s Emirates NBD posts 24% fall in net profit for Q1 2020

Dubai’s Emirates NBD posts 24% fall in net profit for Q1 2020

Total income for the first quarter at Dh6.88bn remains fairly unchanged from Dh6.87bn in the preceding quarter

Dubai’s Emirates NBD posted a 24 per cent year-on-year (y-o-y) decrease in its first quarter net profit, it announced on Monday, April 20.

The net profit for the first quarter amounted to Dhs2.1bn, down from Dhs2.74bn in Q1 last year.

Excluding Denizbank, Emirates NBD’s Q1 net profit was down 43 per cent on a yearly basis.

The bank attributed the decline in its first quarter net profit to higher provisions. However, Q1 net profit rose 3 per cent on a quarterly basis from Dhs2.02bn in Q4 2019.

Net interest income worth Dhs4.93bn improved 45 per cent y-o-y on loan growth and higher NIMs from DenizBank and declined 3 per cent on a quarterly basis from Dhs5.06bn in Q4 2019 as lower interest rates fed through to the loan book.

Total income for the first quarter at Dh6.88bn remains fairly unchanged from Dh6.87bn in the preceding quarter.

“Net cost of risk increased to 210 bps in recognition of the potential deterioration in credit quality in subsequent quarters related to the Covid-19 pandemic,” the bank said.

Meanwhile, impairment allowance of Dhs2.55bn increased 349 per cent on a yearly basis and 24 per cent on a quarterly basis due to higher stage 1 and 2 ECL allowances.

Excluding DenizBank, impairment allowances increased 177 per cent on a yearly basis.

Meanwhile, NPL ratio settled at 5.5 per cent in Q1-2020.

Costs
Costs for the first quarter amounted to Dh2.04bn, an improvement of 18 per cent over the preceding quarter, due to lower staff and marketing expenses and improved cost management. Costs increased 47 per cent year-on-year in Q1 2020 from Dhs1.39bn in Q1 2019 due to the DenizBank acquisition.

“The cost to income ratio at 29.8 per cent is within 2020 guidance but is expected to increase during the year on lower expected income partially offset by further cost management,” the bank added.

Also read: Dubai bank Emirates NBD to reduce tariffs following UAE central bank initiative

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