Dubai's Emirates NBD full year profit plunges 52%; board recommends dividend

Total income for 2020 amounted to $63.24mln, an increase of 4% compared with $61.08mln in 2019

  
A view of Emirates NBD head office in Dubai, UAE January 30, 2018. Image used for illustrative purpose.

A view of Emirates NBD head office in Dubai, UAE January 30, 2018. Image used for illustrative purpose.

REUTERS/Satish Kumar

Dubai's biggest bank Emirates NBD reported a 52 percent  plunge in full-year net profit due to a rise in provisions for bad loans and no repeat of the gain on disposal of Network International shares in 2019.

Net profit for the year fell to 6.97 billion dirhams ($1.9 billion) from 14.5 billion dirhams in 2019 when Emirates NBD sold a stake in payments processor Network International. The board of Emirates NBD has recommended a dividend of 40 fils per share.

The bank's impairment allowances increased to 7.9 billion dirhams reflecting weaker credit environment impact of COVID-19 with net cost of risk at 163 bps. Net interest margin declined 24 bps y-o-y to 2.65 percent following cuts in base interest rates in the first half of 2020.

Sheikh Ahmed Bin Saeed Al Maktoum, Chairman, Emirates NBD said: “Emirates NBD delivered a net profit of 7 billion dirhams in 2020 despite the global pandemic that caused major disruption to individuals, communities and businesses. 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. In light of the Bank’s performance, we are proposing a cash dividend at 40 fils per share.”

Total income for 2020 amounted to 23,211 million dirhams, an increase of 4 percent compared with 22,419 million dirhams in 2019.

Commenting on the Bank’s performance, Shayne Nelson, Group Chief Executive Officer said: “Emirates NBD delivered a 1% improvement in pre-impairment operating profit in 2020 despite a challenging operating environment. Net interest income increased by 8% during the year as the contribution from DenizBank more than offset a decline in margins due to lower interest rates."

"Operating profit was 29 percent lower mainly due to lower interest rates & transaction volumes, coupled with higher impairment allowances," he added.

According to the CEO,  Emirates NBD’s significant investment in digital and technology over the last four years allowed the bank to seamlessly adjust to this change in customer banking behaviour.

"We have provided interest and principal deferral support to over 103,000 customers in the UAE. Many other customers have benefited through waiver of fees and other support, both within the UAE and in the other geographies we operate in. The safety and well-being of our customers and employees remains our top priority. Following a challenging 2020, the expectation for economic growth in the countries that we operate in is more optimistic,” Nelson said.  

Emirates NBD Research expects real GDP growth for 2021 to recover to 3 percent in Dubai and 1.9 percent in the UAE, with the non-oil sector expected to grow by 3.5 percent.

(Writing by Seban Scaria; editing by Daniel Luiz)

(seban.scaria@refinitiv.com)

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© ZAWYA 2021

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