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 ... 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 ... Coronavirus
Coronavirus: Dubai announces stricter lockdown, grocery permits only every three daysDubai has announced new restrictions for movement permits as the emirate aims to ... Coronavirus