Bank already operates 3 branches in India
CL Jose
DUBAI: Emirates NBD, Dubai’s largest bank that’s 56 per cent owned by Dubai Government, has hit the headlines in the recent times for different reasons, but mostly for sterling performance and for scaling new highs on key parameters.
But lately, Emirates NBD, the bank that was created in 2007 by cobbling together two leading Dubai-based banks – Emirates Bank International (EBI) and National Bank of Dubai (NBD), was in headlines for chasing two Indian banks – IDBI Bank and Yes Bank that are said to be up for sale.
Apart from the full-fledged branch in Mumbai, ENBD opened two full-service branches in Gurugram (NCR) and Chennai a few months back.
“India represents important and strategic growth market for the Group that backed the country with a $300 million investment,” said a statement from Emirates NBD.
Race for IDBI Bank
A few weeks back media carried the news that Emirates NBD is in the race for IDBI Bank along with Kotak Mahindra Bank and the Canadian billionaire Prem Watsa’s Fairfax, which is the largest shareholder in the Thrissur headquartered CSB Bank owning close to 50 per cent.
A very recent report stated that Emirates NBD is also in the race for buying a majority stake in Yes Bank, India’s sixth largest private sector bank.
The government of India (GoI) and Life Insurance Corporation of India (LIC) are all set to sell nearly 61 per cent of their stake in IDBI Bank, with the government expecting to complete the sale in FY 2025.
While the government owns over 45 per cent of the bank, LIC owns 49.24 per cent as the largest shareholder in IDBI Bank.
Yes Bank too on radar
Yes Bank Ltd is also looking for a new suitor to sell up to 51 per cent stake, and has hired Citigroup India unit to find a buyer, according to reports.
Yes Bank is also said to have invited some Indian lenders including some of its existing shareholders to join as promoters.
Responding to a query from businessbenchmark.news, the official spokesperson for Emirates NBD informed from Dubai, “We don’t want to comment on this report now.”
There is a lot of action taking place in the banking space in India. Five public sector banks (PSBs) are planning to reduce the government’s stake to less than 75 per cent to comply with the Securities and Exchange Board of India’s (SEBI) minimum public shareholding (MPS) norms.
Market cap
Yes Bank today (Apr 25) closed at Rs25.95 on NSE taking the market cap to Rs77,974 crore, whereas IDBI Bank gained 1.61 per cent before closing at Rs88.20 to climb to a market valuation of Rs94,578 crore.
Strong bank
Emirates NBD is a very strong bank in terms of assets and capital base, and the bank enjoys a very good level of liquidity. Apart from being the largest bank in Dubai in terms of total assets, Emirates NBD is also the fourth largest bank in the Middle East and the second largest in the UAE only to First Abu Dhabi Bank (FAB).
Attractive numbers
Let’s look at some of the relevant key parameters of the bank that help assess the strength of Emirates NBD. Emirates NBD sits on a total equity capital of AED109.97 billion or Rs2,49,083 crore (Rs2.49 trillion).
The bank also maintains cash and deposits with central banks to the tune of AED96.03 billion, which amounts to Rs2,17,440 crore (Rs2.17 trillion) as of December end, 2023.
The bank under review has reported a net profit of AED21.5 billion for the financial year ending December 31, 2023 (FY23) – a 65 per cent year on year increase.
This profit translates to a whopping Rs48,698 crore. Unlike the Indian banks that operate on a cost to income ratio (CIR) upwards of 45 per cent, Emirates NBD’s CIR is just 27.2 per cent, which simply means stronger bottom line or more profitability.
While the liquidity coverage ratio (LCR) at 210 per cent is much above the minimum prescribed by the Central Bank of UAE (CBUAE), the bank has set aside 163 per cent of the non-performing assets (NPL) as provisions, which is unheard of in India.
The bank sits on an assets base of AED863 billion as of December end 2023, which is equivalent to Rs19,54,695 crore (Rs19.55 trillion).
With a deposit base of Rs585 billion, the bank runs a credit- deposit ratio (CD ratio) of a comfortable 76 per cent as of end-FY23.
While the banking regulator, CBUAE, requires the country’s banks to maintain a capital adequacy ratio (CAR) of 10.5 per cent (ratio of capital to risk-adjusted assets), Emirates NBD flaunts a comfortable 17.6 per cent.
Subsidiaries
Emirates NBD has 17 fully owned subsidiaries, which include DenizBank AS inTurkey, Emirates Islamic Bank (EIB) in Dubai and Emirates NBD Egypt.
