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MARGINS IMPROVE

Hesham Abdulla Al Qassim and Shayne Nelson

Emirates NBD H1 net profit up 5pc to top $1bn

DUBAI, July 19, 2017

Emirates NBD (ENBD), a leading bank in the region, delivered a record set of results for the first half (H1) of the year with a net profit of Dh3.9 billion ($1.06 billion) as compared to a net profit of Dh3.7 billion during the same period in 2016, marking a rise of five per cent.

Net interest income improved 2 per cent year-on-year due to loan growth and helped by a recent improvement in margins. Net interest margin improved since the beginning of the year as loans reset at higher rates and funding costs improved as liquidity conditions eased. The operating performance was also supported by a control on expenses and lower provisions. The bank’s balance sheet continues to strengthen with further improvements in credit quality and capital, coupled with solid liquidity ratios.

Emirates NBD affirmed its credentials as the region’s leader in digital banking with a revamp of its online banking platform including the launch of FaceBanking, a video banking facility that allows customers to talk to an advisor at any time for assistance or sign up for a new loan instantly. The bank also announced a planned investment of Dh1 billion over the next three years to carry out a digital transformation programme.

Hesham Abdulla Al Qassim, vice chairman and managing director, Emirates NBD said: “It is extremely pleasing to report that Emirates NBD has achieved its highest ever net profit in the first half of 2017. We are honoured to be the Official Banking Partner for Expo 2020 Dubai where we will play a key role in ensuring that banking services at Expo 2020 Dubai are at the forefront of innovation.”

“Our digital banking leadership, along with our solid financial and operating performance, were once again recognized in this year’s Euromoney Awards for Excellence when Emirates NBD was awarded ‘Best Digital Bank in the Middle East’ and ‘Best Bank in the UAE’. We were pleased to have published Emirates NBD’s first Sustainability Report earlier this year, confirming our commitment to being an ethical and responsible bank.

“The bank now has 10 disability friendly branches among our network. We are also piloting a digital sign language platform for people with hearing disabilities. Throughout 2017, we aim to embrace and adopt the Year of Giving by ensuring that all activities in our CSR calendar are designed to make a difference to individuals, society and the nation as a whole,” he added.

Shayne Nelson, Group chief executive officer, said: “During 2017 we have seen margins widen 20 bps as recent rate rises flowed through to loan pricing and funding costs improved as regional liquidity conditions eased.”

“The Group’s balance sheet continued to strengthen with improved capital and credit quality ratios and liquidity ratios were comfortably maintained within management’s target range. Last year we announced a major investment in our digital platform and we are pleased to unveil the next revamp of our award winning online portal which includes FaceBanking that will empower customers to talk to an advisor over a video call at a time and place of their choosing. We plan to continue our digital transformation program with a planned investment of Dh1 billion over the next three years,” he added.

Group chief financial officer Surya Subramanian said: “The operating performance for the first half of 2017 was pleasing as we saw margins improve coupled with controlled loan growth. Non-interest income declined year-on-year due to the sale of investment securities in 2016 that were not repeated in the current year. Expenses remain firmly under control and provide headroom to invest for future growth. We also delivered a further improvement in credit quality with the NPL ratio strengthening to 6.1 per cent and this, coupled with an increase in margins and lower costs, is a position we expect to hold for the remainder of 2017.”

Total income for the half year ended 30June 2017 amounted to Dh7.453 billion; a decrease of 3 per cent compared with Dh7,671 million during the same period in 2016.

Net interest income improved by2 per cent in H1-17 to Dh5.185 billion as loan growth more than offset margin contraction.

Non-interest income declined 12 per cent compared to the same period in 2016 due to the lower gains from the sale of investment securities. Non-interest income improved 10 per cent compared to H2-16 as a result of lower foreign exchange income due to the Egyptian Pound devaluation at the end of 2016.

ENBD has revised its 2017 UAE GDP growth forecast down to 2 per cent from 3.4 per cent previously on the back of lower oil output, following Opec’s decision to extend production cuts into Q1 2018. However, Dubai’s growth is likely to exceed this on the back of increased investment in infrastructure and a focus on non-oil activity, an ENBD statement said.

Anticipation of a 5 per cent VAT to be introduced in early 2018 may boost spending in the second half of 2017, as consumers bring forward purchases that otherwise would be made in 2018, according to the statement. – TradeArabia News Service




Tags: Emirates NBD | Net Profit |

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