Emirates NBD’s first half net profit up 17% to MAD 4.8 billion

0


[ad_1]

Emirates NBD’s net profit jumped 17% thanks to stable margins, efficient cost management and a significant reduction in the cost of risk.
Image Credit: Ahmed Ramzan / Gulf News

Dubai: Emirates NBD net profit jumped 17% thanks to stable margins, efficient cost management and a significant reduction in the cost of risk reflecting improving business climate.

“The Group’s good results in the first half of the year demonstrate its financial resilience and the success of its diversified economic model. The UAE economy has remained open thanks to the speed and success of the UAE vaccination program, ”said Hesham Abdulla Al Qassim, vice president and general manager.

The strong operating performance on higher transaction volumes reflects improving economic conditions coupled with strong cost management.

“Emirates NBD profits jumped 17% as the impact of lower interest rates was more than offset by firm cost management and a significant improvement in the cost of risk from pre-market levels. pandemic, ”said Shayne Nelson, CEO of the group.

Operational performance

Total revenue for the first half of 2021 increased 9% to 11.54 billion dirhams compared to the previous half due to increased transaction activity and stable net interest margins (NIMs). Total income was down 9% year-on-year as higher unfunded income was offset by lower net interest income due to lower interest rates.

Net interest income remained stable in the second half of 2020, with improved deposit mix offsetting lower asset yields and declined by 12% based on lower interest rates and lower yields on assets. ‘a drop in DenizBank’s margins.

Unfunded income increased 41 percent year-over-year and 2 percent year-on-year due to more intense activity, increased foreign exchange and derivatives revenue, and higher revenue investment securities.

The Bank’s net interest margin is stable at 2.45 percent.

“Margins remained stable thanks to a solid CASA [current and savings account] growth helped moderate the decline in yields on loans and liquid assets. CASA has balances at the highest level ever recorded, which positions us well for possible rate hikes, ”said Patrick Sullivan, group chief financial officer.

Expenditure for the first half of 2021 of 3.76 billion MAD improved by 2% compared to the previous half due to previous management measures. Expenses were 6% lower year-on-year due to lower personnel and operating costs, and lower costs at DenizBank.

Balance sheet

Total assets remained stable during the first half of the year at Dh694 billion, maintaining a strong asset base. In the first half of 2021, loans were down 1% due to corporate loan repayments including supported loans and the impact of currency conversion. In Q2 2021, net lending increased by MAD 2.1 billion as strong demand for retail loans and renewed growth in corporate and Islamic loans offset the impact of DenizBank’s currency conversion.

Deposits fell 1% in the first half of 2021 due to the depreciation of the Turkish lira. The composition of deposits improved, with CASA increasing by Dh 25 billion, helping to replace a Dh 27 billion reduction in more expensive term deposits.

Asset quality

Provisions for depreciation in the first half of 2021 of 2.61 billion dirhams decreased by 30% compared to the previous half and by 38% year-on-year due to improving economic conditions and following proactive provisioning in 2020.

Provisions for impairment fell 38% year on year, with cost of risk improving significantly to 114bp, the lowest since 2019 before the pandemic, while maintaining best-in-class coverage ratios.

Liquidity and capital

Liquidity remains strong with a liquidity coverage ratio of 158.8% and the advance / deposit ratio at 95.7%. During the first half of 2021, the Group raised MAD 20.3 billion in senior term financing, more than fully covering the term debt maturities of this year.

During the first half of the year, the bad debt ratio increased slightly from 0.1 percent to 6.3 percent while the coverage ratio strengthened further to 122.5 percent.

As of June 30, 2021, the Group’s CET-1 [common equity tier 1] is 15.6%, the Tier 1 ratio is 17.6% and the capital adequacy ratio is 18.7%.

[ad_2]

Share.

Leave A Reply