Emirates NBD has seen net profits drop by 20% in the first half of 2009 to AED2.1bn compared to AED2.6bn recorded in 2008.
This fall is due to credit impairment allowances as operating profit before impairments was up by 26% to AED 3.7bn in the first half of 2009, compared to the same period last year.
Total income for the first half was up by 18% to AED5.5bn compared to AED4.7bn for 2008.
The bank does expect an increase in delinquencies and non-performing loans, and the NPL ratio, excluding impaired investment securities, increased to 1.56% in Q2 in 2009 from 1.19% in Q1 and 0.95% in 2008.
Non-interest income recorded a year-on-year decline of 4% to AED1.8bn in the first half of 2009. The bank has put this decline down to lower fees related to trade finance and new underwriting activities, partly offset by a positive mark-to-market gain on investment and other securities in the second quarter of 2009.
The bank’s capital adequacy has also been strengthened to 19% from 11.4% at the end of 2008.
Commenting on the results, the bank’s chief executive officer, Rick Pudner, remarks: “We have seen strong revenue growth this half driven primarily by the broad-based strength of our business, as well as cost efficiencies resulting from ongoing rationalisation and the integration process.”
He adds: “In line with our focus on balance sheet optimisation, we have taken steps to bolster our capital base during the first half of the year.”
Emirates NBD is the largest United Arab Emirates (UAE) bank by asset value. The financial health of all Gulf banks is under close scrutiny, as many of them have exposure to the troubled Saudi conglomerates Saad and Algosaibi. Both Saudi companies have been hit by debt restructuring and fraud allegations, and lawsuits are continuing.
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