The Emirates NBD Head Office on Baniyas street in Dubai. The bank reported a net profit Dh2.1 billion for the first quarter of 2020. Image Credit: Ahmed Ramzan/ Gulf News Archives

Dubai: Emirates NBD a leading banking group in the region, reported a net profit of Dh2.1 billion for the first three months of 2020.

Quarter on quarter, profit improved by 3 per cent while year-on-year it declined 24 per cent. Emirate NBD attributed the decline in first -quarter net profit to higher impairment charges.

Shayne Nelson

“Despite higher provisions in the first quarter of 2020, the bank delivered a good set of results with a net profit of Dh2.1 billion whilst maintaining healthy capital, liquidity and credit quality ratios,” said Shayne Nelson, Group CEO.

The net interest income increased 45 per cent, while non-interest income grew 48 per cent year-on-year. Net interest margin improved 19 basis points year-on-year to 3.02 per cent helped by the positive impact of DenizBank.


The Group’s balance-sheet remains strong with healthy liquidity, credit quality and capital ratios. While credit quality was stable in the first quarter, the Group increased impairment allowances for Stage 1 and 2 coverage in recognition of a potential deterioration in credit quality in subsequent quarters related to the coronavirus pandemic.

Total income amounted to Dh6.88 billion, unchanged compared with Dh6.87 billion in the preceding quarter. Total assets were at Dh692 billion, up 1 per cent from end 2019. Loans increased 1 per cent while deposits were maintained at 2019 levels.

The advances-to-deposits ratio remains comfortably within management’s target range at 94.8 per cent. In Q1-2020, the Group raised Dh9.1 billion of term debt issued in five currencies through two public issues and private placements with maturities up to 20 years.


Costs for the first quarter amounted to Dh2.04 billion, an improvement of 18 per cent over the preceding quarter, due to lower staff and marketing expenses and improved cost management. Costs increased 47 per cent year-on-year in Q1 2020 due to the DenizBank acquisition. Costs increased 2 per cent excluding DenizBank.

The cost-to-income ratio at 29.8 per cent is within the 2020 guidance range of 33 per cent.

Asset quality

During the quarter, the impaired loan ratio remained stable at 5.5 per cent. The impairment charge of Dh2.55 billion is higher by 349 per cent year-on-year and 24 per cent quarter-on-quarter due to higher Stage 1 and 2 ECL allowances.

“Net operating profit declined 24 year-on-year as the Group took additional impairment allowances to increase coverage in anticipation of a deterioration in credit quality in subsequent quarters. Regional banks face multiple challenges from low interest rates, low oil prices and lower economic growth due to disruption from COVID-19,” said Patrick Sullivan, Group Chief Financial Officer.

Capital and liquidity

At the close of Q1-2020, the Group reported liquidity coverage ratio of 149.7 per cent and advances-to-deposits ratio of 94.8 per cent. At the close of the quarter, common equity Tier 1 ratio was 14.8 per cent, Tier 1 ratio is 16.8 per cent and capital adequacy ratio is 17.9 per cent.

“As the global economy and the banking industry face unprecedented challenges due to COVID-19, we remain fully supportive of the UAE Government and the UAE Central Bank’s swift and unprecedented actions in introducing measures to protect the health of UAE residents and to provide economic relief measures to support customers,” said Hesham Abdulla Al Qassim, Vice-Chairman and Managing Director, Emirates NBD.