H1-2024 net profit for UAE mega-bank Emirates NBD surges to Dh13.8 billion

Dubai: UAE banks are looking at another bumper first-half 2024, with Emirates NBD confirming a net profit of Dh13.8 billion - which is an impressive 12 per cent increase from a year ago.

This was based on income generated of Dh21.4 billion, more or less flat on a year-ago basis. The profit increase was brought on by ‘higher net interest income and strong recoveries’, Dubai’s biggest bank said in a statement.

The recovery gains on past exposures will be particularly pleasing for the financial institution. Overall lending in the first-half was above Dh500 billion, which is a 6 per cent growth.

When it comes to Group-wide results, for the April to June period, “Quarterly profit surpassed Dh7 billion for the first time ever, helped by the strongest ever results from Emirates Islamic (Bank), improving margins in (the Turkish entity) DenizBank and sizeable recoveries bolstered by a buoyant economy,” said Shayne Nelson, Group CEO.

“All business units achieved an outstanding performance with record retail lending, a one-third market share of UAE credit card spend and corporate lending originating Dh48 billion of gross new loans as it leverages the Group’s regional presence.”

Lending numbers

While there continues to be constant chatter about when the US Fed will start cutting its interest rates - and which will be matched by the UAE - Emirates NBD’s numbers show there remains sustained appetite for loans.

Lending to corporate clients totalled Dh48 billion of overall new loans. In all, there was a ’12 per cent profit growth on significant loan growth, a stable low-cost funding base and substantial recoveries’, the bank said.

On the loan recovery and impairment side, the bank reported an ‘impairment credit of Dh2.2 billion on regularisation of loan payments as clients benefit from a buoyant economy with impaired loan ratio improving to 4.2 per cent’.

“The credit environment remains healthy,” said Patrick Sullivan, Group Chief Financial Officer. “Loan growth guidance was revised upwards on strong regional demand while cost of risk guidance was positively revised downwards on a healthy credit environment.

“The Group’s net interest margin improved to 3.65 per cent in the second quarter as DenizBank (in Turkey) NIM (net interest margin) increased on favourable loan pricing and stable funding costs.”

Group’s loan split

Personal loans currently make up 29 per cent of the Emirates NBD book, while those to sovereign entities account for 14 per cent. When it comes to key sectors of the local economy, financial institutions and management companies pulled in 14 per cent, real estate clients accounted for 8 per cent, while those in transport and services pulled in another 13 per cent.

Emirates NBD generated 75 per cent of its lending from within the UAE, another 16 per cent came via its Turkey interests, and 9 per cent to international clients.

“The Group’s exceptional performance and strong balance-sheet was recognised by Moody’s, whoi improved Emirates NBD’s credit rating outlook to ‘positive’,” said Sullivan.

Subsidiaries deliver

While Emirates Islamic Bank turned in a record Dh1.7 billion profit for the period, Emirates NBD Group’s Turkey entity DenizBank ‘delivered an impressive Dh800 million profit’ and ‘providing fresh funding to the Turkish economy as their balance-sheet grew to Dh161 billion’.

Progress was there in Saudi Arabia too, with the expansion of its branch network to 18 locations and ‘driving 33 per cent loan growth in H1-24’ in that market.

Growth potential

The Dubai bank is also seeing more potential in Egypt, as the ‘increased support from the UAE and multilateral partners since February has helped drive a turnaround in the country’s fortunes with the economic outlook stabilising’.

And in Turkey, the monetary policy ‘successfully curbed inflation, registering a larger than expected fall in inflation in June’.