Emirates NBD, a leading banking group in the region, delivered a net profit of AED4.1 billion ($1.1billion) for the first half (H1) of 2020, marking a 45% y-o-y decline due to higher impairment charges and the gain on disposal of a stake in Network International not repeated in 2020.

Net interest income increased 36% y-o-y and non-funded income grew 24% y-o-y with the acquisition of DenizBank in 2019. Excluding the gain from Network International net profit was down 24%.The Group’s balance sheet remains strong with healthy liquidity, credit quality and capital ratios. The Group increased impairment allowances for Stage 1 and 2 coverage in anticipation of a potential deterioration in credit quality in subsequent quarters related to the coronavirus (Covid-19) pandemic.

Total income for the first half of 2020 amounted to AED12,628 million; an increase of 33%compared with AED9,527 million during the same period in 2019.

Net interest income improved 36% y-o-y in H1-20 to AED9,305supported by loan growth and higher margins from DenizBank. Net interest income remained unchanged over the preceding half year as lower interest rates and customer relief measures in the second quarter offset the positive impact from DenizBank.

Hesham Abdulla Al Qassim, Vice Chairman and Managing Director, Emirates NBD said:“Emirates NBD delivered a net profit of AED4.1 billion for the first half of 2020 and maintained a strong balance sheet. The UAE Government and the UAE Central Bank took decisive action to protect the health of UAE residents and to provide economic relief measures to support customers and UAE banks.”

“This swift Government action to ensure the safety of UAE residents has enabled the Dubai economy to begin re-opening in a phased and controlled manner. The economic improvement is reflected in the UAE headline PMI which rose to 50.4 in June, the first reading in expansion territory this year.

“I am also proud to announce that Emirates NBD was named ‘’UAE’s Best Bank” in 2020 for a fifth consecutive year by Euromoney. In addition, Emirates NBD was one of only two banks to receive the “Excellence in Leadership in the Middle East” award, introduced this year in light of the Covid-19 impact, as a recognition of the efforts of regional banks in responding to the Covid-19 crisis,” he added.

Shayne Nelson, Group Chief Executive Officer said: “Throughout these unprecedented times, we have put the safety and well-being of our customers and staff first. We proactively reached out to our customer base and support has now been provided to approximately one-tenth of our customers primarily through the deferral of over eight billion dirhams of interest and principal for periods of up to six months.”

“In addition, we have waived certain fees to help individuals and businesses cope with the disruption. We believe that by providing support now we will assist in stabilizing the economy and minimize the impact on our customers. Our award winning digital banking platform has proved invaluable in providing a secure and convenient environment through which our customers can continue to bank from the safety of their own homes. In the last quarter we experienced an increase in the number of both retail and corporate customers using our digital offering.

“As the economy re-opens we are seeing business volumes improving although they are expected to remain below pre-Covid levels in the coming quarters. The Group’s balance sheet remains strong with stable credit, capital and liquidity. Emirates NBD’s solid capital base along with an ability to generate healthy operating profits, provides a strong loss absorption capacity. The UAE Central Bank has been proactive in supporting the economy through liquidity and capital relief measures introduced through TESS and reduced cash reserve requirements,” he added.

Emirates Islamic (EI)

EI reported net profit of AED12 million for the first half of 2020. Total income of AED1,140 million was 15% lower compared to the same period last year. The first half performance reflects the challenging market conditions due to Covid-19 that weighed on business activity and customer sentiment.

Emirates Islamic has provided AED2,088 million of instalment deferrals to over 35,000 customers, offering assistance to 12% of their customer base.

EI’s total assets reached AED64.2 billion as at 30 June 2020. Financing and Investing Receivables increased by 8% to AED40.4 billion from end 2019. Customer deposits at AED45 billion, were broadly flat from end 2019. CASA balances represent 69% of total customer accounts. EI’s headline Financing to Deposit ratio stood at 90%.

DenizBank

DenizBank contributed total income of AED3,995million and net profit of AED929 million to the Group for the first six months of 2020.  It had total assets of AED134billion, net loans of AED84 billion and deposits of AED91 billion at the end of H1-20. DenizBank is the fifth largest private bank in Turkey with wide presence through a network of 743 branches and over 3,000 ATMs. It operates with 708 branches in Turkey and 35 in other territories (Austria, Germany, Bahrain),and its 14,000 employees serve around 14 million customers.

Outlook

Restrictions on economic activity to contain the spread of Covid-19 have had a significant impact on the global economy, with the IMF now expecting global GDP to contract 4.9% this year, an ENBD statement said.

Tourism, hospitality, transportation, logistics, trade, construction and real estate are all adversely affected. The Opec agreement reached in April is expected to result in a sharp contraction in oil production this year.  The UAE economy is, however, expected to return to growth in 2021. The UAE headline PMI rose to 50.4 in June from 46.7 in May, the first reading in expansion territory this year, according to the statement.- TradeArabia News Service