The UAE’s banking sector remains financially sound despite going through challenges posed by the coronavirus pandemic, said Emirates NBD, Dubai’s largest bank, on Wednesday.
The bank is predicting the real gross domestic product (GDP) to recover to 3 percent in Dubai and 1.9 percent in the UAE this year, with the non-oil sector expected to grow by 3.5 percent. It also expects economic growth to return to other markets where Emirates NBD has a presence.
The lender’s net profit for 2020 plunged 52 percent year-on-year to 7 billion dirhams ($1.9 billion).
“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,” said Sheikh Ahmed Bin Saeed Al Maktoum, chairman of Emirates NBD.
The bank credited the “swift and decisive” action of the UAE government for protecting the health of residents and enabling the local economy to “successfully reopen” in the second half of 2020.
It said the UAE Central Bank’s Targeted Economic Support Scheme (TESS) has been instrumental in helping bank customers weather the challenging times.
“The measures introduced by the Central Bank of the UAE, through [TESS] have significantly helped support the financial wellbeing of individuals and businesses,” said Hesham Abdulla Al Qassim, vice chairman and managing director of Emirates NBD.
During the year, the bank provided interest and principal deferral support to more than 103,000 customers in the UAE. Many other customers have benefited through the waiver of fees and other support, both within the UAE and in other markets that the bank operates in, according to Shayne Nelson, group chief executive officer.
“Following a challenging 2020, the expectation for economic growth in the countries that we operate in is more optimistic,” Nelson said.
Banks were among those on the frontlines of the COVID-19 pandemic last year, extending financial relief to struggling individuals and businesses.
The profitability of banks in the country is expected to remain low this year as the impact of the “economic shock reverberates”, according to ratings agency S&P Global.
“We think the 2020 shock will continue to reverberate through the economy and banking sector,” said the agency, adding that it expects real GDP in dollar terms to return to the 2019 level only by 2023.
“The country’s target to vaccinate 50 percent of the population by end Q1 2021 is positive, but further virus waves and mutations pose significant downside risks,” it said.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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