Emirates NBD FY20 profit falls 52 pc to AED6.97 bn

By CL Jose

Impairment allowance up 65 pc; cash dividend at 40 fils a share

DUBAI/January 27-2021: Emirates NBD, the second largest bank in the UAE and the premier lender in Dubai, reported a 52 per cent decline in net profit for 2020 fromAED14.50 billion to AED6.97 billion.

The bank’s board has proposed a cash dividend of 40 per cent of the share capital, which will translate into 40 fils per share held by the shareholders.

The substantial fall in profit during 2020 could, to some extent, be attributed to the 65 per cent increase in the impairment allowances to AED7.94 billion from AED4.82 billion a year earlier.

Last year’s one-time gain

But what made the difference more pronounced was that the 2019 profit included a one-time gain of AED4.39 billion from the disposal of stake in Network International last year.

While the total income for 2020 was to the tune of AED23.211 billion, that of the previous year was a shade low at AED22.42 billion.

Operating profit was AED7.94 billion compared with AED10.39 billion in the previous year representing a 29 per cent decline. The total assets had inched up by 2 per cent for 2020 from AED683.3 billion to AED698.1 billion.

While the loans also improved marginally by just one per cent in volume from AED437.4 billion to AED443.5 billion in the previous year, deposits witnessed a slight drop by 2 per cent from AED472.2 billion to AED464.2 billion.

Emirates NBD said it has provided support to over 103,000 customers in the UAE, and provided assistance to many customers in the other geographies in which the bank operates.

NPLs up slightly

Non-performing loan (NPL) ratio increased 0.6 per cent to 6.2 per cent in 2020, but the provision coverage ratio (PCR) remained strong at 117.3 per cent.

Liquidity coverage ratio (LCR) at 165 per cent and advances to deposit ratio at 95.6 per cent demonstrate a healthy liquidity position for the bank.

Sheikh Ahmed Bin Saeed Al Maktoum (seein in the picture), Chairman, Emirates NBD, said that the bank played its part in supporting customers and the economy by providing financial assistance as well as actively participating in community initiatives.

“As the official banking partner of Expo 2020 Dubai, we look forward to helping showcase the UAE’s innovative, tolerant and proud culture as we welcome the world to the UAE,” he said.

Shayne Nelson, Group Chief Executive Officer, said that Emirates NBD delivered a 1 per cent improvement in pre-impairment operating profit in 2020 despite a challenging operating environment.

Net interest income (NII) increased by 8 per cent during the year as the contribution from DenizBank more than offset a decline in margins due to lower interest rates.

“Operating profit was 29 per cent lower mainly due to lower interest rates and transaction volumes, coupled with higher impairment allowances. Emirates NBD’s resilient operating performance, coupled with a solid balance sheet, will provide a platform for customers to take advantage of growth opportunities in the year ahead,” Nelson said.

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