Emirates NBD posts 45% dip in net profit for H1 2020

Dubai’s Emirates NBD recorded a net profit worth Dhs4.1bn for the first half of 2020, 45 per cent down year-on-year from Dhs7.48bn for H1 2019.

The decline in net profit was driven by higher provisions and no repeat of the gain on disposal of Network International shares in 2019, it announced on July 20.

Excluding the gain from Network International, the bank’s net profit was down 24 per cent.

Meanwhile, total income for the first half of 2020 amounted to Dhs12.6bn, marking an increase of 33 per cent compared to Dhs9.5bn during the same period in 2019.

Net interest income worth Dhs9.3bn improved 36 per cent year-on-year in H1 2020 from Dhs6.8bn in H1 2019, supported by loan growth and higher margins from DenizBank.

Costs for the first half of 2020 amounted to Dhs3.9bn, an increase of 42 per cent year-on-year from Dhs2.8bn in the comparable period in 2019, with the inclusion of DenizBank. However, costs improved 1 per cent year-on-year excluding DenizBank.

Also, the cost-to-income ratio at 31.7 per cent is expected to increase in H2 2020, towards the 33 per cent management guidance.

During the first half of 2020, the non-performing loan ratio also increased to 5.8 per cent.

Customer loans at Dhs442.9bn, grew 1 per cent from end 2019.

The liquidity coverage ratio stood at 152.5 per cent as at June 30, 2020, while the advances to deposits ratio poised at 96.1 per cent.

In H1 2020, the group raised Dhs10.9bn of term debt, including two benchmark senior public bond issues and Dhs7.3bn of private placements with maturities out to 20 years.

Meanwhile, digital activation increased to 76 per cent of the customer base and the share of mobile based digital account opening doubled to over 40 per cent of new individual accounts sourced during Q2 2020.

Hesham Abdulla Al Qassim, vice chairman and managing director, Emirates NBD said: “Emirates NBD delivered a net profit of Dhs4.1bn for the first half of 2020 and maintained a strong balance sheet. The UAE Government and the UAE Central Bank took decisive action to protect the health of UAE residents and to provide economic relief measures to support customers and UAE banks. This swift government action to ensure the safety of UAE residents has enabled the Dubai economy to begin re-opening in a phased and controlled manner. The economic improvement is reflected in the UAE headline PMI which rose to 50.4 in June, the first reading in expansion territory this year.”

“Throughout these unprecedented times, we have put the safety and well-being of our customers and staff first. We proactively reached out to our customer base and support has now been provided to approximately one-tenth of our customers primarily through the deferral of over Dhs8bn of interest and principal for periods of up to six months. In addition, we have waived certain fees to help individuals and businesses cope with the disruption. We believe that by providing support now we will assist in stabilising the economy and minimise the impact on our customers,” said Shayne Nelson, group chief executive officer.

“As the economy re-opens we are seeing business volumes improving although they are expected to remain below pre-Covid levels in the coming quarters. The Group’s balance sheet remains strong with stable credit, capital and liquidity. Emirates NBD’s solid capital base along with an ability to generate healthy operating profits, provides a strong loss absorption capacity. The UAE Central Bank has been proactive in supporting the economy through liquidity and capital relief measures introduced through TESS and reduced cash reserve requirements.”

Also read: Emirates NBD and Visa commit to a 5-year partnership agreement