Emirates NBD beats COVID-19 blues with $1.52bn net profit

By Rahul Vaimal, Associate Editor
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Emirates NBD
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The Dubai government-owned bank Emirates NBD recorded a net profit of $1.52 billion in the first nine months of 2020 despite the critical economic condition over the past six months.

The bank, in its report, stated that its total income of $4.98 billion has increased by 18 percent when compared to previous years whereas the operating profit witnessed a 24 percent fall to $1.6 billion on higher provisions.

The net profit dropped 55 percent year-on-year due to higher provisions, net interest income improved 21 percent and the non-funded income grew nine percent with the full-year acquisition of Turkey-based DenizBank.

Hesham Abdulla Al Qassim, the vice-chairman and managing director of Emirates NBD said the bank maintained a strong balance sheet. “The bank’s results reflect a pick-up in economic activity during the third quarter.”

He further added that the UAE central bank’s Targeted Economic Support Scheme has been highly helpful for customers as well as banks to prevent credit issues arising in the future.

Shayne Nelson, group chief executive officer, said that considering the crisis that both the individuals and businesses have gone through over these past six months, the bank has managed to remain profitable and maintained a strong balance sheet.

Shayne Nelson
Shayne Nelson
Group CEO
Emirates NBD

“We have used that strength to support our customers affected by the disruption caused by COVID-19 to help avoid credit issues developing in the future. As the economy has started to reopen, we continue to provide nearly $1.7 billion of interest and principal deferrals to over 98,500 customers. The safety and well-being of our customers and employees remain our top priority.”

Patrick Sullivan, group chief financial officer, stated that the operating profit of $1.6 billion in the first nine months of 2020 was appreciable given the severe 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. Excluding last year’s gain on disposal of Network International shares, net profit declined 30 percent 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,” he stated.

Mr. Sullivan explained that the bank continues to have satisfactory operating performance, along with a strong balance sheet to navigate various challenges from low-interest rates and uncertain economic conditions. The banking group continues to operate with high liquidity and healthy capital ratios.

In the past nine months, loans increased by 1 percent whereas deposits decreased three percent solely because of the lower contribution from DenizBank. Liquidity remained strong with the liquidity coverage ratio at 161.7 percent.

The bank said it raised $4.65 billion of term debt in seven currencies including three benchmark senior public bond issues and private placements with a maturity period of 30 years.

As of September 30, the Emirates NBD’s common equity tier 1 ratio is 15.6 percent, tier 2 ratio is 18 percent and the capital adequacy ratio is 19.1 percent.