Emirates NBD H120 underlying net profit is down by 24% year-over-year due to higher impairment charges.

On a reported basis, the Emirates NBD H120 net profit of AED4.1bn is down by 45% y-o-y. This is due to higher provisions and the gain on disposal of a Network International stake not repeated in 2020.

Emirates NBD is increasing impairments in anticipation of a potential deterioration in credit quality arising from the Covid pandemic.

The bank’s balance sheet remains strong with healthy liquidity, credit quality and capital ratios.

Emirates NBD H120 retail banking highlights

The bank’s Retail Banking & Wealth Management unit delivers a resilient performance in the first half of 2020. Total income of AED3.96bn is down 2% compared to the corresponding period in 2019.  Net interest income increases by 5% y-o-y led by growth in liabilities and higher loan volumes.

Fee income falls by 14% due to lower business volumes and fee waiver as Emirates NBD extends relief to customers during the precautionary shutdown due to Covid-19.

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Operating costs are 8% lower compared to the previous period as cost measures introduced last year took effect.

Retail Banking and Wealth Management is providing AED716m of instalment deferrals to over 54,000 customers, offering assistance to 8% of its customer base. Additional relief measures rolled out include interest free credit card instalment payment plans, fee waivers and account minimum balance waivers.

Liabilities rise by AED5.9bn (4%) during the year, as Current & Savings Accounts (CASA) balances grow AED11.6bn (9%) in 2020. Retail advances decrease by AED3.2bn over end 2019 from lower retail loan acquisitions and credit card spends.

Digital growth: 76% of customers digitally active

Digital activation increases to 76% of the customer base and the share of mobile based digital account opening doubled to over 40% of new individual accounts sourced during Q2 2020.. Liv., the lifestyle digital bank for millennials continues to enhance its UAE franchise with the pilot launch of a new personal loan.

Private Banking performance for the first half of 2020 was healthy, with a 12% increase in total income compared to the corresponding period in 2019. Investment performance at Emirates NBD Asset Management remained robust as a number of new client mandates were received.

Emirates NBD H120 group financial key metrics

Total income of AED12.6bn improves by 33% y-o-y on loan growth and higher fee income from the inclusion of DenizBank.

The bank’s net interest margin improves by 7 basis points y-o-y to 2.84% helped by the positive impact of DenizBank.

Total assets are up by 2% from end 2019 to AED694bn.

Over the same period, total loans rise by 1% to AED443bn while deposits are down 2% to AED461bn.

The bank’s impressively low cost-income ratio inches up slightly y-o-y by 2 percentage points to 31.7%.