Emirates NBD PJSC braced for credit losses by more than doubling the amount of money set aside in provisions amid the coronavirus pandemic as it reported a 55% slump in its nine-month profit.
Dubai’s biggest bank increased impairment allowances more than anticipated by some analysts, bringing the total to 6.4 billion dirhams ($1.7 billion), according to a statement on Tuesday. Profit dropped to 5.6 billion dirhams on higher impairments and as a gain from last year’s sale of a stake in Network International Holdings Plc wasn’t repeated.
Built on trade and tourism in a region reliant on oil, Dubai’s economy has buckled under the coronavirus pandemic and low crude prices. With job losses and weak domestic demand still a drag on businesses, banks in the Gulf are increasing provisioning in preparation for the possible deterioration in asset quality.
“Loan-loss charges were higher than expected,” Jaap Meijer, head of equity research at Arqaam Capital, said in a message. “More deferred loans may need to be impaired.”
Emirates NBD nine-month numbers vs year ago:
- Profit 5.6 billion dirhams vs 12.5 billion dirhams
- Impairments 6.36 billion dirhams vs 2.76 billion dirhams
- Excluding the gain from Network International, profit fell 30%
- Total income 18.28 billion dirhams vs 15.5 billion
- Net interest income 13.4 billion dirhams vs 11.1 billion
- Cost to income ratio 31.8% vs 30.3%
- Net interest margin 2.73% vs 2.82%
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