Emirates NBD’s H1 profit surges 17% to Dh4.8b

Dubai - Dubai’s largest banking group said in a statement that its strong first-half results demonstrate financial resiliency and the success of its diversified business model.

Emirates NBD’s net profit jumped 17 per cent to Dh4.8 billion year-on-year in the first half of 2021 on stable margins, improving economic conditions and a significant reduction in the cost of risk, reflecting the enhanced business sentiment.

Dubai’s largest banking group said in a statement that its strong first-half results demonstrate financial resiliency and the success of its diversified business model.

The bank’s total income surged nine per cent over the preceding half year due to a marked increase in transactions as expenses declined 6.0 per cent y-o-y to Dh 3.8 billion on disciplined cost management action, a bank statement said.

Impairment allowances declined 38 per cent y-o-y with cost of risk substantially improving to 114bp, lowest since 2019 pre-pandemic, while still maintaining best-in-class coverage ratios while net interest margin stable at 2.45 per cent with lower cost of funding from record CASA balances mitigating lower yields on loans and liquid assets.

“Emirates NBD continues to support businesses and customers recovering from the global pandemic, while accelerating the pace of investment in digital and its international network to support future growth. Retail lending recorded its best ever quarter, including record growth for credit cards, personal loans, and home loans,” said the statement.

The bank provided Dh10.7 billion of support to over 120,000 customers and recorded Dh6.8 billion of repayments, demonstrating the group’s successful efforts in mitigating the financial impact on customers from Covid-19.

Total assets remained stable during the first half at Dh 694 billion maintaining a strong asset base as customer loans reached Dh438 billion with Q2-21 a record quarter for growth in personal loans, credit cards and mortgages.

The group’s net profit for the first-half is 66 per cent higher over the preceding half year and 17 per cent higher y-o-y on improving economic conditions with DenizBank adding significant diversification, the bank said.

Hesham Abdulla Al Qassim, vice chairman and managing Director of ENBD, said the group’s strong first-half results demonstrate its financial resiliency and the success of its diversified business model.

“The UAE economy has remained open thanks to the speed and success of the UAE’s vaccination programme,” he said.

Shayne Nelson, group chief executive officer, said the jump in net profit, despite the impact of lower interest rates, was due to the strong cost management and a significant improvement in the cost of risk to pre-pandemic levels.

“I am proud that we continue to use the Group’s strong balance sheet to support our customers, empowering them to benefit from the expanding economy. The group expanded its branch presence in the Kingdom of Saudi Arabia to seven with the opening of a third branch in Riyadh,” said Nelson.

Patrick Sullivan, group chief financial officer, said total income for the first-half of 2021 was up 9.0 per cent to Dh11.54 billion over the preceding half year due to increased transactional activity and stable margins.

Non-funded income improved year-on year with Q2-21 a record quarter for growth in personal loans, credit cards and mortgages while margins remained stable as strong CASA growth helped mitigate lower yields on loans and liquid assets, said Sullivan.

The bank’s NPL ratio increased marginally by 0.1 per cent to 6.3 per cent with coverage ratio strengthening to 122.5% per cent reflecting Group’s prudent approach to credit impairment. The bank’s 158.8 per cent Liquidity Coverage Ratio and 15.6 per cent Common Equity Tier-1 ratio reflect the group’s core strengths enabling continued support to customers and the wider community, the statement said.

Emirates NBD Research expects the non-oil economy to grow by 3.5 per cent this year, although curbs on oil production will weigh on GDP growth, which is expected to reach 1.5 per cent in 2021. — issacjohn@khaleejtimes.com