Profits of top two UAE banks drop amid coronavirus pandemic

The United Arab Emirates’ top two banks reported drops in profit last year as they make huge provisions to counter the impact of the coronavirus crisis.

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Emirates NBD, Dubai’s largest bank, said on Wednesday its net profit plunged by 52 percent to $1.9 billion from $3.9 billion in 2019.

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The bank, the UAE’s second-largest lender, said it has set aside $2.15 billion in impairments for potential risks from the coronavirus pandemic -- a 65 percent increase from last year.

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“Emirates NBD delivered a net profit of seven billion dirhams ($1.9 billion) in 2020 despite the global pandemic that caused major disruption to individuals, communities and businesses,” said chairman Sheikh Ahmed bin Saeed Al-Maktoum.

The bank said in a statement that total income increased four percent to $6.3 billion from $6.1 billion last year “as the positive contribution from DenizBank helped offset a decline in net interest margin due to lower interest rates.”

Emirates NBD acquired Turkish lender DenizBank in 2019.

In the UAE capital, First Abu Dhabi Bank, the country’s biggest lender, on Tuesday posted a profit of $2.9 billion for last year, down from $3.4 billion in 2019 -- a 15 percent decrease.

Blaming the lower profitability on the unprecedented global situation arising from the coronavirus pandemic, low interest rates and volatile markets, the bank said it had increased impairment charges to $707.9 million.

The UAE’s central bank said in April last year that it had doubled to $70 billion a stimulus package aimed at supporting the economy and domestic banks in the face of the novel coronavirus pandemic.