(Bloomberg) --

Emirates NBD PJSC reported a surge in earnings and said impairment charges dropped sharply even as asset quality barely improved.

Dubai’s biggest bank said its nine-month profit rose an annual 29% to 7.3 billion dirhams ($2 billion), while impairment allowances dropped 42%. The ratio of non-performing loans was at 6.2% as of Sept. 30, unchanged from a year earlier, according to a statement on Wednesday.

Dubai, which kicked off its $7 billion Expo this month, has reaped the benefits of a faster reopening after the pandemic paralyzed trade and travel. While higher oil prices also mean a boon for the United Arab Emirates, of which Dubai is a part, S&P Global Ratings has warned that weak tourism will likely long remain a drag on the economy of the Middle East’s commercial hub.

Emirates NBD said it had a record quarter for demand for personal loans and credit cards. Its cost of risk, or a proportion of new loan-loss provisions to total loans, dropped to 106 basis points as of Sept. 30, from 176 basis points a year earlier, reaching a level that’s at “the low-end of the pre-pandemic range,” according to Group Chief Financial Officer Patrick Sullivan.

“The balance sheet remains rock solid with a further improvement in capital, liquidity and credit quality” during the third quarter, Sullivan said in the statement. 

The UAE’s central bank has meanwhile begun winding down an economic support program launched in response to the coronavirus, which helped curb risks for lenders. The withdrawal of forbearance measures will likely lay bare the impact of the pandemic on weaker businesses.

The loan deferral component of the stimulus program will expire by the end of 2021 with financial institutions able to carry on tapping a collateralized 50-billion-dirham liquidity facility until the middle of 2022.

Emirates NBD also said its international expansion has continued, with additional branches in Saudi Arabia and approval granted to expand the bank’s India retail network. Group Chief Executive Officer Shayne Nelson said 36% of income now comes from international operations.

Emirates NBD nine-month numbers vs year ago:

  • Total income 17.3 billion dirhams vs 18.3 billion dirhams
  • Impairments 3.7 billion dirhams vs 6.4 billion dirhams
  • Operating profit 7.9 billion dirhams vs 6.1 billion dirhams
  • 157.2% liquidity coverage ratio and 16.1% common equity Tier-1 ratio
  • Total assets stable at 699 billion dirhams





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