DUBAI: Emirates NBD has taken a significant AED1.5 billion hit in its profit & loss (P&L) account for H1 2025, thanks to hyperinflation accounting in Turkey where its subsidiary DenizBank operates.
Emirates NBD, which is 40.92 per cent owned by Dubai government, through the Investment Corporation of Dubai (ICD), has logged a net profit of AED6.31 billion for the quarter ending June 30, 2025 and AED12.53 billion for the first half.
The AED1.5 billion hit from Turkey reflects the erosion of monetary assets in a high-inflation environment – a direct impact on reported earnings.
However, when adjusted for inflation-restated values of non-monetary assets and equity, the bank saw a net positive swing of AED1.1 billion in its other comprehensive income (OCI) as per the Emirates NBD financial statements.
While the gain strengthens the group’s capital base, it does not cushion reported profits – highlighting how hyperinflation accounting can have a split impact across the financial statements.
The inclusion of the AED1.1 billion gain in OCI doesn’t flow into core earnings but is nonetheless important from a shareholder equity perspective – signalling that the group’s balance sheet remains resilient even amid volatile macroeconomic backdrops.
More broadly, the treatment underscores how hyperinflation accounting can create a disconnect between reported profits and underlying value preservation.
“For investors and analysts tracking Middle Eastern banks with exposure to high-inflation economies, especially Turkey, this highlights the need to look beyond headline earnings and carefully evaluate comprehensive income to understand the full financial picture,” said the financial controller of a bank from Mumbai while talking to businessbenchmark.news
Recovery from write-offs
While a net write-back of loan loss provisions to the tune of AED278 million added positively to the bottom line of the bank during the first half, the contribution from Corporate and Institutional Banking alone amounted to AED1.47 billion.
However, much of this impact was nullified by the additional provisioning requirements from retail banking and a much larger requirement of AED1.059 billion from DenizBank during the period.
Emirates NBD’s income surged 12 per cent to AED23.9 billion on strong loan growth, regional expansion and innovative product offering during the period.
Lending increased by AED41 billion (8 per cent) in the first half of 2025, fuelled by very strong demand both in the UAE and across its growing international network.
Deposits grew by AED70 billion (10 per cent) in the first half of 2025 propelled by a record AED48 billion increase in low-cost current and savings account (CASA) balances. Operating profit grew 9 per cent as the strong loan and deposit growth momentum easily absorbed earlier interest rate cuts.
Hesham Abdulla Al Qassim, Vice Chairman and Managing Director of Emirates NBD said the group commands a 35 per cent market share of UAE credit card spend as the bank processed more than AED100 billion credit and debit card spend in the first half of 2025.
“We successfully launched the ‘SHARE’ credit card, cobranded with the Majid Al Futtaim Group, which became the Group’s fastest ever card to reach 10,000 in issue,” he added.
