- Net Profit of AED 4.1 billion, 45% lower y-o-y on higher provisions and non-repeated gain on disposal of Network International stake

- Common equity tier 1 ratio strengthens to 15.3%

Dubai, 20 July 2020: Emirates NBD (DFM: EmiratesNBD), a leading banking group in the

region, delivered a net profit of AED 4.1 billion for the first half of 2020. Net interest income

increased 36% y-o-y and non-funded income grew 24% y-o-y with the acquisition of DenizBank

in 2019. Net profit declined 45% y-o-y due to higher impairment charges and the gain on

disposal of a stake in Network International not repeated in 2020. Excluding the gain from

Network International net profit was down 24%. The Group’s balance sheet remains strong with

healthy liquidity, credit quality and capital ratios. The Group increased impairment allowances

for Stage 1 and 2 coverage in anticipation of a potential deterioration in credit quality in

subsequent quarters related to the coronavirus (Covid-19) pandemic.

Financial Highlights – H1 2020

-Total income of AED 12.6 billion improved 33% y-o-y on loan growth and higher fee income from the inclusion of DenizBank

- Net profit of AED 4.1 billion declined 45% y-o-y on higher provisions and gain from sale of Network International shares not repeated in 2020. Excluding the Network International gain in Q2-19, net profit was down 24%

- Impairment allowances increased to AED 4.2 billion with annualised net cost of risk increasing to 172 bps as the Group increased Stage 1 and 2 expected credit loss (ECL) allowances

- Net interest margin improved 7 bps y-o-y to 2.84% helped by the positive impact of DenizBank

- Total assets at AED 694 billion, up 2% from end 2019

- Customer loans at AED 443 billion, up 1% from end 2019

- Customer deposits at AED 461 billion, down 2% from end 2019

- Non-performing loan ratio increased to 5.8% and coverage ratio remained strong at 116.9%

- Liquidity coverage ratio of 152.5% and advances to deposit ratio of 96.1% demonstrate a healthy liquidity position

- Common equity tier 1 ratio strengthened to 15.3%, over 7% above minimum requirements  

Hesham Abdulla Al Qassim, Vice Chairman and Managing Director, Emirates NBD

said: “Emirates NBD delivered a net profit of AED 4.1 billion for the first half of 2020 and

maintained a strong balance sheet. The UAE Government and the UAE Central Bank took

decisive action to protect the health of UAE residents and to provide economic relief measures

to support customers and UAE banks. I am pleased with Emirates NBD’s efforts to help affected

customers and I am proud of the commitment shown by our management and employees to

ensure that we provide an uninterrupted, full banking service to our customers and the

community. This swift Government action to ensure the safety of UAE residents has enabled the

Dubai economy to begin re-opening in a phased and controlled manner. The economic

improvement is reflected in the UAE headline PMI which rose to 50.4 in June, the first reading in

expansion territory this year. I am also proud to announce that Emirates NBD was named

‘’UAE’s Best Bank” in 2020 for a fifth consecutive year by Euromoney. In addition, Emirates NBD

was one of only two banks to receive the “Excellence in Leadership in the Middle East” award,

introduced this year in light of the Covid-19 impact, as a recognition of the efforts of regional

banks in responding to the Covid-19 crisis. We are grateful to the wise Leadership of the UAE

during these challenging times.”

Commenting on the Group’s performance, Shayne Nelson, Group Chief Executive Officer

said:“Throughout these unprecedented times, we have put the safety and well-being of our

customers and staff first. We proactively reached out to our customer base and support has now

been provided to approximately one-tenth of our customers primarily through the deferral of over

eight billion dirhams of interest and principal for periods of up to six months. In addition, we have

waived certain fees to help individuals and businesses cope with the disruption. We believe that

by providing support now we will assist in stabilizing the economy and minimize the impact on

our customers. Our award winning digital banking platform has proved invaluable in providing a

secure and convenient environment through which our customers can continue to bank from the

safety of their own homes. In the last quarter we experienced an increase in the number of both

retail and corporate customers using our digital offering. As the economy re-opens we are

seeing business volumes improving although they are expected to remain below pre-Covid

levels in the coming quarters. The Group’s balance sheet remains strong with stable credit,

capital and liquidity. Emirates NBD’s solid capital base along with an ability to generate healthy

operating profits, provides a strong loss absorption capacity. The UAE Central Bank has been

proactive in supporting the economy through liquidity and capital relief measures introduced

through TESS and reduced cash reserve requirements.”

Patrick Sullivan, Group Chief Financial Officer said: “The net profit of AED 4.1 billion for the

first half of 2020 was resilient given the significant impact of the challenging operating

environment through Q2-20, which saw interest margins decline from rate cuts, lower economic

activity affecting non-funded income, and an elevated cost of risk from our proactive Stage 1

and 2 loan provisioning. Pre-impairment operating profit rose 29%y-o-y on higher income from

loan growth and improved margins from the inclusion of DenizBank. Net profit declined 45% y-o-

y, or down 24% due to higher provisions excluding the gain on disposal of Network International

in Q2-19. Margins declined in Q2-20 as lower interest rates fed through to the loan book. We

are acting to manage costs to reflect lower levels of economic activity, albeit cost reduction will

not entirely offset lower levels of income. Emirates NBD continues to have a good underlying

operating performance, coupled with a robust balance sheet to help navigate these multiple

challenges from low interest rates, low oil prices and lower economic growth due to disruption

from Covid-19. The Group continues to operate with strong liquidity and healthy capital ratios.”

Financial Review

Total income for the first half of 2020 amounted to AED 12,628 million; an increase of 33%

compared with AED 9,527 million during the same period in 2019.

Net interest income improved 36% y-o-y in H1-20 to AED 9,305 supported by loan growth and

higher margins from DenizBank. Net interest income remained unchanged over the preceding

half year as lower interest rates and customer relief measures in the second quarter offset the

positive impact from DenizBank.

Non-funded income improved 24% y-o-y on the back of higher core fee income from DenizBank

but declined 7% over the preceding half year due to lower business activity during the Covid-19

shutdown.

Costs for the first half of 2020 amounted to AED 3,999 million, an increase of 42% y-o-y with the

inclusion of DenizBank. Costs improved 1% y-o-y excluding DenizBank. The cost-to-income

ratio at 31.7% is expected to increase in the second half towards the 33% management

guidance.

During the first half of 2020, the Non-Performing Loan Ratio increased to 5.8%. The impairment

charge in H1-20 of AED 4,211 million is 243% higher y-o-y due to higher Stage 1 and 2 ECL

allowances.

The Group’s net profit of AED 4,091 million in H1-20 is 45% below that posted in the

comparable period in 2019. The decline in net profit was driven by higher provisions and no

repeat of the gain on disposal of Network International shares in 2019.  Net profit was down

24% excluding the Network International gain in 2019. 

Loans increased by 1% while Deposits were down 2% since the beginning of the year. Liquidity

remains strong with the Liquidity Coverage ratio at 152.5% as at 30 June 2020 and the

Advances to Deposits Ratio at 96.1%. In H1-20, the Group raised AED 10.9 billion of term debt,

including two benchmark senior public bond issues and AED 7.3 billion of private placements

with maturities out to 20 years.

As at 30 June 2020, the Group’s Common Equity Tier 1 ratio is 15.3%, Tier 1 ratio is 17.3% and

Capital Adequacy ratio is 18.5%.

Business Performance

Retail Banking & Wealth Management (RBWM)

Retail Banking & Wealth Management delivered a healthy performance in the first half of 2020

with total income of AED 3,961 million, down 2% compared to the corresponding period in

2019.  Net interest income increased by 5% y-o-y led by growth in liabilities and higher loan

volumes. Fee income fell by 14% due to lower business volumes and fee waiver as Emirates

NBD extended relief to customers during the precautionary shutdown due to Covid-19.

Operating costs were 8% lower compared to the previous period as cost measures introduced

last year took effect.

RBWM has provided AED 716 million of instalment deferrals to over 54,000 customers, offering

assistance to 8% of their customer base. Additional relief measures rolled out included interest

free credit card instalment payment plans, fee waivers, account minimum balance waivers etc.

Digital processes to assist customers with routine service requests or to sign up for new loan,

card and wealth products were put in place. About three in four branches in the UAE were

temporarily closed, and are being gradually reopened in line with the easing of restrictions.

Liabilities grew by AED 5.9 billion (4%) during the year, as Current & Savings Accounts (CASA)

balances grew AED 11.6 billion (9%) in 2020. Retail advances decreased by AED 3.2 billion

over end 2019 from lower retail loan acquisitions and credit card spends.

Digital activation increased 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. New

digital platforms to facilitate auto and rental loans and push notification sign-ups for overdrafts

and card balance conversion programs were rolled out. Ramadan offers for personal and auto

loans were announced and a 0% interest home loan campaign in partnership with Emaar was

introduced. Liv., the lifestyle digital bank for millennials continued 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.

Corporate & Institutional Banking (C&IB)

Corporate and Institutional Banking delivered total income of AED 3,126 million for the first half

of 2020 in line with the corresponding period in 2019. Net profits were up by 8% due to lower

impairment allowances.

We have provided several support measures to our clients across all key sectors to cope with

the business disruption caused by Covid-19, including repayment deferral relief of interest and

principal for up to six months and reduced bank charges through digital channels.

Corporate and Institutional Banking has provided AED 5,504 million of instalment deferrals to

275 customers, offering assistance to 8% of their customer base.

Net interest income of AED 2,486 million for the first half of 2020 was 4% higher than the

corresponding period in 2019 due to growth in lending activity. Fee income of AED 640 million

for the first half of 2020 declined by 15% compared to the corresponding period in 2019 as lower

lending fees and trade commissions more than offset the increase in investment banking

activity.

Costs for the first half of 2020 were unchanged from H1-19 due to a firm control on costs. Our

focus on digitization and technology has further enhanced the Transaction Banking Services

product offering.

In terms of the balance sheet, assets grew by 5% due to increased lending activity. Liabilities

were 5% higher with growing CASA balances reflecting the Group’s aim on lowering its average

cost of funding while maintaining liquidity at an optimum level.

The credit quality of newly originated business remains robust. Net impairment allowances

improved in   H1-20 despite higher Stage 1 and 2 allowances on account of anticipated

deterioration in credit quality in subsequent quarters as a corporate debt restructuring improved

the credit profile.

Global Markets & Treasury (GM&T)

Global Markets and Treasury income declined to AED 9 million in H1-20 due to lower interest

rates.

The Trading and Sales desks continued to deliver a solid performance despite significant market

volatility.

The Global Funding Desk raised AED 10.9 billion of term funding in H1-20, including two

benchmark senior public bond issues and AED 7.3 billion of private placements with maturities

out to 20 years.

Emirates Islamic (EI)

EI reported net profit of AED 12 million for the first half of 2020. Total income of AED 1,140

million was 15% lower compared to the same period last year. The first half performance reflects

the challenging market conditions due to Covid-19 that weighed on business activity and

customer sentiment.

Emirates Islamic hasprovided AED 2,088 million of instalment deferrals to over 35,000

customers, offering assistance to 12% of their customer base.

EI’s total assets reached AED 64.2 billion as at 30 June 2020. Financing and Investing

Receivables increased by 8% to AED 40.4 billion from end 2019. Customer deposits at AED 45

billion, were broadly flat from end 2019. CASA balances represent 69% of total customer

accounts. EI’s headline Financing to Deposit ratio stood at 90%.

DenizBank

DenizBank contributed total income of AED 3,995 million and net profit of AED 929 million to the

Group for the first six months of 2020.  It had total assets of AED 134 billion, net loans of AED

84 billion and deposits of AED 91 billion at the end of H1-20. DenizBank is the fifth largest

private bank in Turkey with wide presence through a network of 743 branches and over 3,000

ATMs. It operates with 708 branches in Turkey and 35 in other territories (Austria, Germany,

Bahrain), and its 14,000 employees serve around 14 millio