Emirates NBD’s 9-month profit soars 29% to Dh7.3b

Dubai: Emirates NBD, a leading regional lender, reported a net profit of Dh7.3 billion for the nine months of 2021, up 29 per cent compared to the same period last year.

The banking group’s net profit of Dh2.5 billion for the third quarter of 2021 is 61 per cent higher than the same period in 2020.

“Emirates NBD’s growth in income and profitability in the third quarter of 2021 is a clear sign of improving economic conditions within the region. The UAE economy has fully reopened and is well positioned to benefit from the expected growth in international travel,” said Hesham Abdulla Al Qassim, Vice Chairman and Managing Director.

Balance sheet trends

Overall the results show, the bank’s balance sheet strengthened with further improvements in deposit mix, credit quality, capital and liquidity.

Total income for the third quarter was up 7 per cent over the preceding quarter to Dh5.8 billion on an improved loan mix with record demand for credit cards and personal loans, an increase in CASA [current and savings account] balances and a higher contribution from DenizBank, a Turkish bank owned by Emirates NBD.

Total income for the first nine months of 2021 was down 5 per cent year on year as income momentum was offset by the impact of record low interest rates. Expenses for the first nine months of 2021 were 2 per cent lower than in 2020 and continue to be well controlled with the cost to income ratio within guidance.

“The diversified balance sheet and solid capital base remains a core strength of the Group. We are using this strength to support our customers, empowering them to benefit from the growing economy as Expo 2020 Dubai begins,” said Shayne Nelson, Group Chief Executive Officer.

Banks total assets at the close of the third quarter was Dh699 billion. During Q3, net loans grew by Dh100 million as a record demand for retail financing was largely offset by a decline in corporate lending due to repayments.

Deposits grew 2 per cent in Q3 2021 with Dh5 billion further growth in CASA and Dh4 billion growth in fixed deposits as the Group conservatively maintained access to all sources of funding.

Asset quality

Impairment allowances for the first nine months of 2021 were 42 per cent lower due to improving economic conditions and following proactive provisioning in 2020. The 106 bps cost of risk for 2021 year to date is at the low-end of the pre-pandemic range despite the Group maintaining the highest coverage level amongst its peers.

During Q3 2021 the non-performing loans (NPL) ratio improved by 0.1 per cent to 6.2 per cent whilst the coverage ratio strengthened further to 126.7 per cent.

Liquidity and capital

Bank’s liquidity remains strong with the liquidity coverage ratio at 157.2 per cent and the advances to deposits ratio at 94 per cent. During the first nine months of 2021, the Group raised Dh21.9 billion of senior term funding, taking advantage of historically low cost of term funding.

“The balance sheet remains rock solid with a further improvement in capital, liquidity and credit quality during Q3,” said Patrick Sullivan, Group Chief Financial Officer.

As at 30 September 2021, the Group’s common equity tier 1 (CET-1) ratio is 16.1 per cent, Tier 1 ratio is 18.1 per cent and capital adequacy ratio 19.2 per cent.