Sunday 28 February 2021
 
»
 
»
Story

Sheikh Ahmed Bin Saeed Al Maktoum and
Hesham Abdulla Al Qassim

Emirates NBD posts $1.9bn net profit in 2020

DUBAI, January 27, 2021

Emirates NBD (ENBD) a leading banking group in the region, delivered a net profit of AED7 billion ($1.9 billion) in 2020 despite a challenging operating environment, marking a 52% y-o-y decline on higher provisions and gain from sale of Network International shares not repeated in 2020.

Total income increased 4% y-o-y as the positive contribution from DenizBank helped offset a decline in net interest margin due to lower interest rates and a reduction in non-funded income, an ENBD statement said.

Emirates NBD provided support to over 103,000 customers in the UAE, and provided assistance to many customers in the other geographies in which the Bank operates. Emirates NBD further enhanced its digital products and services as an increasing number of customers embraced this secure and convenient way of banking.

The Group’s balance sheet remains healthy with strong capital, liquidity and impaired loan coverage ratios. These results have enabled the Board of Directors to recommend a 2020 dividend of 40 fils per share.

Financial highlights

•    Total income of AED23.2 billion improved 4% y-o-y on loan growth, including DenizBank
•    Excluding the Network International gain in 2019, net profit was down 31% y-o-y
•    Impairment allowances increased to AED7.9billionreflecting weaker credit environment impact of Covid-19 with net cost of risk at163bps
•    Net interest margin declined24 bps y-o-y to 2.65%following cuts in base interest rates in the first half of 2020
•    Total assets atAED698 billion, up 2% from 2019
•    Customer loans at AED444billion, up 1% from 2019
•    Customer deposits atAED464 billion, down 2% from2019
•    Non-performing loan ratio increased0.6%to 6.2% in 2020 and coverage ratio remained strong at 117.3%
•    Liquidity coverage ratio of 165% and advances to deposit ratio of 95.6%demonstrate a healthy liquidity position
•    Common equity tier 1 ratioof15.0%

Sheikh Ahmed Bin Saeed Al Maktoum, Chairman, Emirates NBD said: “The Central Bank of the UAE’s Targeted Economic Support Scheme has been instrumental in helping customers and banks through these challenging times. I am proud that Emirates NBD played its part in supporting customers and the economy by providing financial assistance as well as actively participating in community initiatives.

“We continue to support the economy of the UAE as it proudly celebrates its golden jubilee in 2021 and we are excited to play an important role in the UAE’s further development over the next fifty years. 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.”

Hesham Abdulla Al Qassim, Vice Chairman and Managing Director, Emirates NBD said: “Emirates NBD’s strong balance sheet, coupled with the ongoing ability to generate operating profit, enabled the Bank to successfully deal with the unforeseen challenges in 2020, achieving a net profit of AED7 billion and growing total assets to AED698 billion.

“Emirates NBD has further cemented its reputation for innovation in products and service in the fourth quarter with the unveiling of businessONLINE, providing corporate clients with a, seamless, secure and agile single-window to support all their banking needs. We also launched the E20. Digital Business Bank which simplifies banking for start-ups, entrepreneurs and SMEs. “

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% lower mainly due to lower interest rates & transaction volumes, coupled with higher impairment allowances. Emirates NBD’s resilient operating performance, coupled with a solid balance sheet will provide a platform for customers to take advantage of growth opportunities in the year ahead.”

Emirates Islamic (EI)

EI reported a net loss of AED482 million in 2020 mainly due to higher impairments on its financing and investment book. EI’s total income of AED2.1 billion declined 22% during the year due to lower income from financing receivables and investments and lower fee and commission income due to the impact of Covid-19 on economic activity. EI successfully issued a AED1.8 billion benchmark Sukuk during 2020.  

EI’s total assets reached AED70.6 billion at the end of 2020. Financing and Investing Receivables increased by 9% to AED40.8 billion during the  year and Customer accounts grew by 3% to AED46.9 billion. CASA balances represented 69% of total customer accounts. EI’s headline Financing to Deposit ratio stands at 87% and is comfortably within the management’s target range.

DenizBank

DenizBank contributed total income of AED7,257 million and net profit of AED1,369 million to the Group for 2020. It had total assets of AED131 billion, net loans of AED81 billion and deposits of AED85 billion at the end of 2020. DenizBank is the fifth largest private bank in Turkey with a wide presence through a network of 730 branches and over 3,100 ATMs. It operates with 695 branches in Turkey and 35 in other territories (Austria, Germany, Bahrain) servicing more than 14 million customers, through over 14,000 employees.  

Outlook

Following a strict lockdown during the second quarter of 2020, the UAE Government’s clear guidelines enabled the UAE economy to re-open in the second half of 2020. Emirates NBD’s Research team forecasts that the UAE economy contracted by 6.9% in 2020, as both oil and non-oil sectors were impacted by coronavirus.

However,  Emirates NBD Research expects real GDP growth for 2021 to recover to 3% in Dubai and 1.9% in the UAE, with the non-oil sector expected to grow by 3.5%. Economic growth is also expected to return to other countries where Emirates NBD has a presence. – TradeArabia News Service




Tags:

More Finance & Capital Market Stories

calendarCalendar of Events

Ads