Emirates NBD Q3 profit falls 69% to AED1.56b

Last year comparable periods’ profits had one-off gains 

DUBAI/October 20: Emirates NBD, the largest banking group in Dubai, reported a net profit of AED1.56 billion for the three months ending September 30, 2020 as against AED5 billion for the same period last year.

The banking group’s net profit for  9 months ending September 30, 2020, was to the tune of AED5.6 billion compared with AED12.48 billion for the same period in the earlier period.

During both periods in the earlier year, the profit was backed by a one-off gain from disposal of stake in a jointly controlled entity and fair value gain on retained interest.

While AED4.39 billion was such gain for the nine-month period last year, it was AED2.32 billion that was part of the three-month  profit during the last year, which obviously helped the profitability look much higher compared with that of the corresponding periods in the current year.

Net interest income

Net interest income (NII) increased 21 per cent year-on-year and non-funded income grew 9 per cent year-on-year during the nine months with the full year inclusion of DenizBank.

Net profit for nine months declined 55 per cent year-on-year due to higher impairment charges and the gain on disposal of a stake in Network International not repeated in 2020.

The decline in net profit during the three-month period due to the same reason was to the extent of 69 per cent. Total income of AED 18.3 billion improved 18 per cent year-on-year on loan growth during the nine months, including DenizBank.

Impairment allowance

Impairment allowances for the nine months increased to AED6.4 billion. Total assets at AED692 billion, was up by a marginal 1 per cent from end-2019.

While the customer deposits at AED 458 billion was down by 3 per cent from end-2019, non-performing loan ratio increased to 6 per cent and coverage ratio remained strong at 119.6 per cent as of September 30, 2020.

Hesham Abdulla Al Qassim, Vice Chairman and Managing Director, Emirates NBD said that 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 (TESS) has been influential in supporting customers and banks now in order to prevent credit issues arising later,” he added.

He also said Emirates NBD’s results reflect a pick-up in economic activity during the third quarter and the bank has a strong balance sheet, which it will continue to use to help drive economic growth.

Commenting on the Group’s performance, Shayne Nelson, Group Chief Executive Officer said that 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 AED 6.6 billion of interest and principal deferrals to over 98,500 customers,” he added.