Emirates NBD  has posted a net profit of AED2.3 billion ($626 million) for the first quarter (Q1) of the year, rising 12% y-o-y and 76% q-o-q to on improving economic conditions with DenizBank adding significant diversification to the Group.

Results highlights of first quarter2021:

•    Strong operating performance on improving economic conditions coupled with effective cost management
•    Total income up 25% q-o-q to AED6.2 billion on a marked recovery of non-funded income and higher net interest income as NIMs successfully absorbed the unprecedented rate cuts of 2020
•    Expenses declined 9% y-o-y and q-o-q to AED1.9 billion on effective cost management discipline
•    Impairment allowances reduced 31% y-o-y with a substantially lower net cost of risk at 158 bps following proactive provisioning in previous quarters
•    Net interest margin increased to2.46%with lower cost of funding from strong CASA growth mitigating NIM reduction in DenizBank after Q4 2020 and Q1 2021 rate increases
•    Strong capital and liquidity combined with a healthy deposit mix and higher profits enable the Group to provide continued support to customers and clients

Hesham Abdulla Al Qassim, Vice Chairman and Managing Director said: “Emirates NBD’s increase of Q1 profit to AED2.3 billion, up 12% y-o-y, reflects the resilience and gradual economic recovery following the global disruption in 2020.”

“We recently published our 2020 Corporate Social Responsibility report highlighting the Group’s achievements and commitment to environmental and social issues. Emirates NBD will mark the ’Year of the 50th’ with a number of events which will recognise the UAE’s achievements over the last 50 years and inspire the Nation’s youth to develop their vision for the next 50 years with innovation and creativity.”

Shayne Nelson, Group Chief Executive Officer said:  “I am proud of the way our colleagues at Emirates NBD have focused on supporting customers and clients, and with that a 12% improvement in profitability y-o-y and up 76% q-o-q. These strong Q1 results enable us to accelerate the pace of investment in digital and in our international network to support future growth.”

“In Q1-21, Emirates NBD expanded its branch network in the Kingdom of Saudi Arabia with new branches in Madinah and Makkah. In March 2021, Emirates NBD issued a USD 1,750 million ESG-linked syndicated loan with pricing linked to further improvements in water utilisation and the percentage of women in senior management. This is the first such loan issued from a bank in the Gulf region.

“Economic growth is expected to improve this year in all the countries that the Group operates in. Contactless payments now make up 84% of Emirates NBD’s face-to-face payment transactions as consumers embrace touch-free technology. Mobile-wallet based payments using Apple Pay, Samsung Pay and Google Pay more than doubled in 2020 as customers increasingly use personal devices to make payments,” he added.

Patrick Sullivan, Group Chief Financial Officer said: “Emirates NBD delivered a 12% increase in profit y-o-y to AED2.3billion with the significant impact of lower interest rates being more than offset by significantly lower credit impairment, and good cost discipline.  The 76% increase in profit q-o-q reflects a strong recovery of non-funded income, particular in our Turkish unit, DenizBank.

“Emirates NBD’s strong balance sheet and liquidity enables us to continue to supporting customers and clients on the path to recovery from the global pandemic. Our profitability and strong capital also enables us to maintain very prudent levels of credit impairment coverage, putting us on a very strong footing.”
 
Outlook

The global economy is showing signs of recovery as vaccinations programmes against Covid-19 are rolled out. The UAE has administered over 90 vaccines per 100 people, the second highest vaccination rate in the world, enabling the economy to reopen and exit strict lockdown measures ahead of many other economies.  Emirates NBD Research expects the non-oil economy to grow by 3.5% in 2021, although curbs on oil production will weigh on headline GDP growth, which is expected to reach 1.4% this year.  

Turkey and Egypt were two of the few countries to post positive GDP growth in 2020 and the market expects higher growth in each country this year. In Turkey, the recent increase in coronavirus infections remains a key risk to the summer tourism season, which is an important driver of growth and employment.

The Kingdom of Saudi Arabia’s economy is expected to grow by 0.7% this year after contracting 4.1% in 2020.  The non-oil sector is expected to grow 4.0% in 2021 with extended oil production cuts weighing on GDP growth. Higher oil prices will help to reduce the budget deficit to just 1.4% of GDP this year, and a number of initiatives have been announced to boost domestic investment. – TradeArabia News Service