Stock - Emirates NBD
Emirates NBD's deposit base totalled a substantial Dh53 billion at the end of first-half 2023. Of this, CASA made up Dh37 billion. Image Credit: Bloomberg

Dubai: For one of the UAE’s biggest banks, Emirates NBD, it’s ‘record’ territory at the half-year mark, with profits hitting Dh12.3 billion from Dh21.3 billion in income generated. Both numbers are a record for the Dubai-headquartered bank, helped by ‘improved’ loan and deposits as well as the prevailing higher interest rates.

In the second quarter alone, the bank had income of Dh10.8 billion and a profit of Dh6.2 billion.

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“The exceptional profitability reflects higher margins, growing non-funded income and a lower cost of risk on significant recoveries,” it said.

“Emirates NBD’s market-leading deposit franchise added Dh53 billion of deposits including Dh37 billion of low-cost CASA (current and savings accounts).”

What brought on the record numbers?

Net interest margin grew a substantial 110 basis points to 3.96 per cent, while loans - despite concerns about successive rate hikes - grew quite substantially by 5 per cent. That translated into ‘record’ retail and corporate lending ‘across the region’.

Down on impairments

Where Emirates NBD also scored was in bringing down the impairment allowances by an impressive 50 per cent y-o-y on higher credit quality, ‘reflecting the Group’s prudent approach to credit provisions’

All of which then translated into a balance-sheet that shot past Dh800 billion for the first time.

“Emirates NBD’s profit hit a record high of Dh12.3 billion for the first-half reflecting the Group’s growing regional presence and visionary investment in technology and AI, which is driving new product delivery and propelling growth,” said Hesham Abdulla Al Qassim, Vice-Chairman and Managing Director.

The mention about tech investments is telling, which includes a ‘refresh’ for its digital banking entity Liv. Another win was the ‘Emirates NBD Pay’, its merchant acquiring service, that collected more than Dh1 billion in the first 100 days.

“All business units generated a substantial increase in income, helping Emirates NBD deliver its strongest ever half-year for both income and profit,” said Patrick Sullivan, Group CFO.

Patrick Sullivan
“The Group’s success in growing an inexpensive and diversified funding base has positioned the bank to continue benefiting from higher interest rates,” said Sullivan.

That Emirates NBD was building up to a substantial H1-23 was reflected in its stock as well, which hit a new high on the DFM recently.

Loan book

Loans and advanced hit Dh479 billion in the first six months, up 13 per cent on the Dh425 billion a year ago. This has been a constant theme for UAE banks right through, going by the results announced. Appetite for debt remains high, among businesses and retail clients alike, notwithstanding the 10 rate hikes between March 2022 and end June 2023. (To which was added another on July 26.)

Interestingly enough, in its financials, Emirates NBD made a Dh1.4 billion ‘hyperinflation adjustment’, down from the Dh1.9 billion in H1-2022. More signs of inflation pressures cooling off.

Regional heft - and there is AI too

Apart from the entrenched presence in the UAE, the bank is scoring on its regional exposures. And then there are the sustained investments on new-generation tech.

“The Group’s earlier investment in technology provides a bedrock to launch many exciting new products and services and harness the power of Generative AI to further transform Emirates NBD’s operations and enhance productivity,” said Shayne Nelson, Group CEO.