DUBAI: Emirates NBD, a leading banking group in the region, delivered a net profit of AED 5.6 billion in the first nine months of 2020, a news release said.
Net interest income increased 21% y-o-y and non-funded income grew 9% y-o-y with the full year inclusion of DenizBank. Net profit declined 55% y-o-y due to higher impairment charges and the gain on disposal of a stake in Network International not repeated in 2020.
The Group’s balance sheet remains healthy with stable credit quality coupled with strong liquidity and capital ratios. The Group continued to increase impairment allowances for Stage 1 and 2 coverage in light of the challenging economic climate.
Financial Highlights – Q3 2020 YTD
- Total income of AED 18.3 billion improved 18% y-o-y on loan growth, including DenizBank
- Net profit of AED 5.6 billion declined 55% y-o-y on higher provisions and gain from sale of Network International shares not repeated in 2020. Excluding the Network International gains in 2019, net profit was down 30%
- Impairment allowances increased to AED 6.4 billion with annualised net cost of risk of 176 bps as the Group increased Stage 1 and 2 expected credit loss (ECL) allowances
- Net interest margin declined 9 bps y-o-y to 2.73% as lower interest rates fed through to the loan book
- Total assets at AED 692 billion, up 1% from end-2019
- Customer loans at AED 442 billion, up 1% from end-2019
- Customer deposits at AED 458 billion, down 3% from end-2019
- Non-performing loan ratio increased to 6.0% and coverage ratio remained strong at 119.6%
- Liquidity coverage ratio of 161.7% and advances to deposit ratio of 96.6% demonstrate a healthy liquidity position
- Common equity tier 1 ratio strengthened to 15.6%, over 7% above minimum requirement
Hesham Abdulla Al Qassim, Vice Chairman and Managing Director, Emirates NBD said: “Emirates NBD delivered a net profit of AED 5.6 billion in the first nine months of 2020 and maintained a strong balance sheet.
“The UAE Government has followed its earlier decisive action to protect the health of UAE residents with clear, prescriptive and measured guidelines to reopen the economy with safety continuing to be the top priority. 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. We are grateful to the UAE’s wise leadership during these challenging times.”
Commenting on the Group’s performance, 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 casued by Covid-19 to help avoid credit issues developing in future.
“As the economy has started to reopen, we continue to provide nearly AED 6.6 billion 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 sterilization 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.”
Patrick Sullivan, Group Chief Financial Officer said: “The operating profit of AED 6.1 billion in the first nine months of 2020 was resilient given the challenging operating environment. Net interest income declined throughout 2020 due to lower interest rates but non-funded income improved in the third quarter of 2020 as volumes picked-up following the acute disruption in Q2 2020.
“The cost-to-income ratio was brought back within guidance following earlier management actions in response to lower income. Excluding last year’s gain on disposal of Network International shares, net profit declined 30% as higher income from the inclusion of DenizBank was more than offset by additional credit impairment provisions as the Group boosted Stage 1 and 2 coverage ratios.
“Emirates NBD continues to have a good operating performance, coupled with a robust balance sheet to help navigate multiple challenges from low interest rates and uncertain economic growth. The Group continues to operate with strong liquidity and healthy capital ratios.”
Emirates NBD (DFM: Emirates NBD) is a leading bank in the region.
Emirates NBD has a leading retail banking franchise, with 925 branches and 4,115 ATMs / SDMs in the UAE and overseas. It is a major player in the UAE corporate and retail banking arena, and has strong Islamic banking, investment banking, private banking, asset management, global markets & treasury and brokerage operations.
The bank has operations in the UAE, Egypt, India, Turkey, the Kingdom of Saudi Arabia, Singapore, the United Kingdom, Austria, Germany, Bahrain, Russia and representative offices in China and Indonesia.
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