Dubai’s Emirates NBD records 55% net profit dip for first nine months of 2020

Dubai-based lender Emirates NBD recorded a 55 per cent drop in net profit for Q1-Q3 2020, posting Dhs5.6bn, down from Dhs12.48bn during the corresponding period last year.

The decline in net profit was driven by higher provisions and no repeat of gain from the sale of Network International shares in 2019. Net profit was down 30 per cent excluding Network International.

Meanwhile, total income for the first nine months of 2020 amounted to Dhs18.27bn, an 18 per cent increase compared with Dhs15.54bn during the same period in 2019.

The total non-funded income improved 9 per cent year-on-year on the back of higher fee income from DenizBank, excluding which, the same declined 19 per cent on lower volumes triggered by the pandemic.

Simultaneously, costs for the first nine months of 2020 increased by 23 per cent to Dhs5.8bn due to the inclusion of DenizBank, excluding which the same improved 5 per cent year-on-year.

The non-performing loan ratio during Q1-Q3 increased to 6 per cent, while the impairment charge during this period of Dhs6.3bn is 131 per cent higher year-on-year as Stage 1 and 2 coverage increased.

Loans increased by 1 per cent since the beginning of the year, while deposits were down 3 per cent. Meanwhile, liquidity remains strong with the liquidity coverage ratio at 161.7 per cent as at September 30, 2020.

In the first nine months of 2020, the group raised Dhs17.1bn of term debt in seven currencies including three benchmark senior public bond issues and private placements with maturities up to 30 years.

“Emirates NBD delivered a net profit of Dhs5.6bn in the first nine months of 2020 and maintained a strong balance sheet,” noted Hesham Abdulla Al Qassim, vice chairman and managing director, Emirates NBD.

“The UAE Central Bank’s Targeted Economic Support Scheme has been influential in supporting customers and banks now in order to prevent credit issues arising later. I am proud that Emirates NBD have provided assistance to customers affected by coronavirus as well as being actively involved in community initiatives. The bank’s results reflect a pick-up in economic activity during the third quarter and Emirates NBD has a strong balance sheet which we will continue to use to help drive economic growth.”

Shayne Nelson, group chief executive officer, said: “Despite the challenging conditions that individuals and businesses have faced over the last six months, Emirates NBD has remained profitable and maintained a strong balance sheet. We have used that strength to support our customers affected by the disruption caused by Covid-19 to help avoid credit issues developing in future. As the economy has started to reopen, we continue to provide nearly Dhs6.6bn of interest and principal deferrals to over 98,500 customers.”

“The safety and well-being of our customers and employees remains our top priority. As branches and offices reopen, we have maintained additional deep cleaning and sterilisation protocols and provided training in precautionary measures to frontline staff. Throughout the year, we have seen more customers utilise our digital banking offering as a secure and safe platform through which to bank.”