Emirates NBD full year profit surges 44% on Network International exit

The lender reported a Dh4.4bn gain last year from the sale of its shares in London listed payments firm

Emirates NBD and other Dubai lenders will help customers manage their finances during the coronavirus crisis and its economic impact. Satish Kumar / The National

Emirates NBD, Dubai’s largest lender by assets, said 2019 full-year profit surged  44 per cent, boosted by the partial sale of its stake in payments firm Network International.

Net profit for the 12 months to the end of December climbed to Dh14.5 billion, the lender said in a statement to the Dubai Financial Market, where its shares trade. The results include a gain of Dh4.4bn on the partial disposal of Network International shares and a fair value measurement of the lender’s remaining stake in the firm. Excluding the impact of the transaction, net profit rose 1 per cent year-on-year, it noted.

Last year “was a momentous year for Emirates NBD leading to a strong net profit,” Sheikh Ahmed Bin Saeed, chairman of Emirates NBD, said. “The underlying performance, coupled with strategic initiatives, helped Emirates NBD generate significant shareholder value [during the year].”

Emirates NBD partially sold its stake in Network International, which listed on the London Stock Exchange in April. The bank, which completed a rights issue last year to support its capital base, also acquired Turkey’s DenizBank in the third quarter of 2019, helping the lender expand its presence to 14 million customers in 13 countries in the Middle East, North Africa and Turkey.

The lender’s performance comes despite tougher market conditions and slower loan growth across the GCC banking sector, as global economic growth weakens. Emirates NBD reported total income of Dh22.4bn, a 29 per cent year-on-year increase helped by higher fee income.

Customer loans, including DenizBank, the lender said, increased 33 per cent to Dh437bn last year. Customer deposits also jumped 36 per cent to Dh472bn.

Impairment allowances of Dh4.82bn, however, was 176 per cent higher year-on-year. The net cost of risk increased to 117 basis points “including DenizBank, higher charges and lower writebacks and recoveries”, the lender said.

The lender's net interest margin improved 7 bps to 2.89 per cent helped by the positive impact of the DenizBank acquisition.

Total assets grew 37 per cent to Dh683bn during 2019 as the lender maintained a healthy liquidity position at the end of last year.

“Core operating profit rose 4 per cent as higher income more than offset a rise in expenses and provisions,” said Shayne Nelson, the lender's group chief executive. “The bank’s balance sheet remains healthy and the acquisition of DenizBank helped grow total assets. NIMs [net interest margins] improved …. helped by our expansion into Turkey.”

Emirates NBD said its retail banking and wealth management business performed well with income climbing 8 per cent to Dh8bn, supported by growth in net interest income from liabilities. Fee income, which represents 33 per cent of total revenue, grew 5 per cent during the year driven by cards, loans and foreign exchange.

Its wholesale banking’s total income came in at Dh6bn, up 2 per cent compared to 2018.

In 2019, Emirates NBD raised the foreign ownership limit of its shares to 20 per cent from 5 per cent and said it plans to further increase the limit to 40 per cent.