(MENAFN- Khaleej Times) Dubai largest banking group, Emirates NBD, reported on Tuesday a 12 per cent year-on-year surge in net profits to Dh2.32 billion for the first quarter on the back of lower provisions, improved costs and higher income from improved economic conditions.
The bank said on a quarter-on-quarter basis the first quarter net profit jumped 76 per cent up, claiming that the results enable it to accelerate the pace of investment in digital and in its international network to support future growth.
'Profitability and strong capital also enables the bank to maintain very prudent levels of credit impairment coverage, the lender said in a statement.
The bank said its total assets remained stable at Dh695 billion while customer loans stood at Dh436 billion with strong demand for personal loans, auto loans and mortgages. Deposit mix improved further with CASA (current and savings account) increasing by Dh16 billion to 56 per cent of total deposits
Non-performing loan ratio improved 0.1 per cent to 6.1 per cent with Coverage ratio strengthening to 125.1 per cent reflecting the bank's prudent approach to credit impairment, said the statement.
A 165.1 per cent liquidity coverage ratio and 15.6 per cent common equity Tier-1 ratio reflect the group's core strengths enabling continued support to customers and the wider community, the statement said.
'Emirates NBD's increase of Q1-21 reflects the resilience and gradual economic recovery following the global disruption in 2020, said Hesham Abdulla Al Qassim, vice-chairman and managing director.
The bank expects the UAE non-oil economy to grow by 3.5 per cent in 2021, although curbs on oil production will weigh on headline GDP growth, which is expected to reach 1.4 per cent this year.
The group's total income for the first quarter rose 25 per cent to Dh6.16 billion compared with Dh4.93 billion in the preceding quarter. Net interest income was up 1.0 per cent over the quarter with net interest margin improving 4.0 basis points.
Non-funded income shot up by 133 per cent quarter-on-quarter with increased contribution from all lines and up 6 per cent year-on-year on improved fee and investment securities income. 'These strong results enable us to accelerate the pace of investment in digital and in our international network to support growth, said Shayne Nelson, Group CEO.
Nelson said contactless payments now make up 84 per cent of Emirates NBD's face-to-face payment transactions as consumers embrace touch-free technology. 'Mobile-wallet based payments using Apple Pay, Samsung Pay and Google Pay more than doubled in 2020 as customers increasingly use personal devices to make payments.
In the first quarter Emirates NBD increased its branch network in Saudi Arabia to six and became the first foreign bank to be granted permission to open branches in Madinah and Makkah.
The bank reported strong operating performance on improving economic conditions coupled with effective cost management. Total income rose 25 per cent q-o-q to Dh 6.2 billion on a marked recovery of non-funded income and higher net interest income as NIMs successfully absorbed the unprecedented rate cuts of 2020 while eexpenses declined 9.0 per cent y-o-y and q-o-q to Dh1.9 billion on effective cost management discipline, the bank said.
The bank reported 31 per cent reduction in impairment allowances y-o-y with a substantially lower net cost of risk at 158 bps following proactive provisioning in previous quarters.
'Our profitability and strong capital also enables us to maintain very prudent levels of credit impairment coverage, putting us on a very strong footing, Patrick Sullivan, group chief financial officer.
During the first quarter, the Group raised Dh15.4 billion of senior term funding including the first ESG-linked syndicated loan from a bank in the Gulf. DenizBank issued its first Diversified Payment Rights transaction since 2014.
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