Dubai’s biggest bank Emirates NBD sets $700 million aside to cover coronavirus losses
Emirates NBD PJSC set aside about $700 million in the first quarter to cover bad loans, giving investors a glimpse at the damage the coronavirus and lower oil prices are wreaking on bank earnings in the Gulf.
Dubai’s biggest bank increased impairments more than four times, resulting a 24 percent drop in its first-quarter profit, according a statement. The lender boosted provisions for a potential deterioration in credit quality in the coming quarters due to the coronavirus pandemic, it said.
• Profit 2.08 billion dirhams vs 2.74 billion
• Impairment allowances 2.56 billion vs 570 million
• Total income 6.89 billion dirhams vs 4.72 billion
• Net interest income 4.94 billion dirhams vs 3.4 billion
• Non-interest income 1.95 billion dirhams vs 1.32 billion
• Cost to income ratio 29.8 percent vs 29.6 percent
• Net interest margin 3.02 percent vs 2.83 percent
“Regional banks face multiple challenges from low interest rates, low oil prices and lower economic growth due to disruption from COVID-19,” Group CFO Patrick Sullivan said
Banks in the six-member Gulf Cooperation Council face an “earnings shock” from the plunge in oil prices and the coronavirus pandemic, according to S&P Global Ratings. Profit growth at Qatar National Bank, the Middle East’s biggest lender, stalled in the first quarter, while Dubai’s Mashreqbank recorded a 28 percent drop and Oman’s Bank Muscat posted a 27 percent decline.
Business conditions in Dubai worsened in March to the lowest level since IHS Markit began compiling its purchasing managers’ index a decade ago. Banks might get a boost in the coming months after the United Arab Emirates cut required reserves for demand deposits, and unlocked more stimulus to support lending.
Watch: Foreign workers undergo coronavirus testing in DubaiThe Dubai government has set up a number of testing centers to detect people infected with the coronavirus around the city, especially in densely ... Coronavirus
Coronavirus: Dubai extends 24-hour lockdown as it fights COVID-19 pandemicDubai has extended a 24-hour lockdown for another week as it continues to fight the coronavirus pandemic with a national disinfection program, the ... Coronavirus
Coronavirus: Dubai announces stricter lockdown, grocery permits only every three daysDubai has announced new restrictions for movement permits as the emirate aims to combat the spread of the coronavirus.Permits to leave the house to ... Coronavirus