CBD
Commercial Bank of Dubai (CBD) on Wednesday reported a net profit result of Dh315 million for the first quarter of 2020, down 7.3 per cent against the same period in 2019. Image Credit: Supplied

Dubai: Commercial Bank of Dubai (CBD) on Wednesday reported a net profit result of Dh315 million for the first quarter of 2020, down 7.3 per cent against the same period in 2019.

“The result was adversely impacted by low interest rates, weaker business conditions, specific credit events and anticipated impacts associated with the Covid-19 pandemic. Consequently, impairment allowances taken were Dh240 million for Q1 2020,” the bank said in a statement.

CBD’s Operating income for the first quarter of 2020 amounted to Dh757 million, a decrease of 2.3 per cent and Operating profit of Dh555 million, down by 2.3 per cent attributable to lower net interest income (NII) as a result of sharply lower interest rates and a 3.3 per cent decrease in other operating income (OOI).

Dr. Bernd van Linder

“The current environment is challenging for every community around the world including across the UAE. Notwithstanding this difficult operating environment we continued to grow our market share in the first quarter of 2020, delivering on our strategy,” said Dr. Bernd van Linder, Chief Executive Officer of CBD.

Balace sheet

The bank reported total assets of Dh89.9 billion at the close of the first quarter, up by 2.1 per cent compared to Dh88.1 billion at yearend 2019. Net loans and advances were Dh62.3 billion, registering an increase of 3.6 per cent compared to Dh60.2 billion as at the end of 2019.

Customers’ deposits were Dh63.9 billion as at March 31, 2020 representing an increase of 0.9 per cent compared to Dh63.3 billion at the end of 2019. Low cost current and savings accounts (CASA) constitute 40.6 per cent of the total deposit base, while the financing-to-deposits ratio stood at 97.6 per cent.

Asset quality

The non-performing loan (NPL) ratio increased to 6.59 per cent up from 5.94 per cent at the end of 2019.

In accordance with IFRS9 accounting standards, the bank increased expected credit losses, predominantly associated with forecast Covid-19 impacts and several specific credit events. As a result, the net impairment provisions totalled Dh240 million for the quarter. The coverage ratio was 66.62 per cent, down from 83.14 per cent at the end of 2019.

“In accordance with accounting standards, we have prudently increased forecast expected credit losses associated with Covid-19 in anticipation of challenging economic conditions for the remainder of the year,” said Dr van Linder.

Liquidity and capital adequacy

CBD’s liquidity position remained robust with the advances to stable resources ratio at 90.8 per cent at the end of the first quarter 2020. Capital ratios remained strong with the capital adequacy and common equity Tier 1 (CET1) ratios at 13.86 per cent and 12.71 per cent, respectively.