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Emirates NBD reports 42% surge in Q2 profit

Another record half-year for retail lending and customer transactions together with improving margins drove income up 23 per cent y-o-y

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Emirates NBD on Thursday reported its highest first-half profit since 2019 by recording an 11 per cent surge in net profit to Dh 5.3 billion year-on-year.

The bank’s Q2 profit was exceptionally strong at Dh3.5 billion, up 42 per cent y-o-y basis.

“Another record half-year for retail lending and customer transactions together with improving margins drove income up 23 per cent y-o-y basis,” Dubai’s largest lender said in a statement.

Credit quality across the group’s footprint continues to improve with impairment down 28 per cent.

“We are extremely well positioned for rising interest rates and will continue to invest in our international and digital capabilities to support further growth,” the bank said. Earnings per share was up 14 per cent to 80 fils for first half of 2022.

The bank reported an increase in operating performance as loan and deposit mix improved on continued record demand for retail financing. Total income rose 23 per cent y-o-y basis to Dh14.2 billion “on improved loan mix and cheaper deposits with higher interest rates feeding through to margins.”

Net interest margin guidance raised by 50bps due to higher interest rates and improving margins in DenizBank.

Hesham Abdulla Al Qassim, vice-chairman and managing director of Emirates NBD, said the second quarter profit jump by 42 per cent reflected the strong regional economy and the group’s diversified sources of income.

“We were delighted that Moody’s upgraded Emirates NBD’s short and long-term ratings, recognising the group’s resilient post-pandemic financial fundamentals and increased diversification.”

Shayne Nelson, group CEO, said the surge in total income by 23 per cent to Dh14.2 billion was on improved loan and deposit mix, with higher interest rates feeding through to margins. International operations contributed 41 per cent of total income in first half of 2022.

Nelson said the bank’s new lending increased substantially with a record half-year for retail lending and renewed corporate lending demand.

The bank’s impairment allowances were substantially down 28 per cent y-o-y basis reflecting the improving operating environment, said the statement.

“We have maintained good income growth momentum, kept a firm control of costs and seen a consistent decline in the cost of risk,” said Patrick Sullivan, group CFO.

Net profit of Dh5.3 billion increased by a healthy 11 per cent y-o-y, comfortably absorbing the impact from inflation in Turkey.

“The UAE banking sector continues to benefit from ample liquidity, helped by the high oil price. In H1-22 we grew CASA balances by Dh10 billion, enabling the Group to benefit from interest rate rises,” said Sullivan.

Emirates NBD’s total assets grew three per cent to Dh711 billion as customer loans rose one per cent to Dh425 billion with a record half-year for retail financing and renewed demand for corporate lending.

CASA grew Dh10 billion in first half of 2022 reflecting strong UAE liquidity, enabling the group to benefit from further interest rate rises. NPL ratio improved by 0.3 per cent to 6.1 per cent in the second quarter of 2022 on healthy write-backs and recoveries as the economy continues to strengthen.

A 155 per cent liquidity coverage ratio and 15 per cent common equity tier-1 ratio reflect the group’s solid balance sheet, the bank said.

Emirates NBD and Emirates Islamic have close to a combined 30 per cent market share of UAE debit and credit card spend, the statement said.

— issacjohn@khaleejtimes.com