Emirates NBD quarterly profit slumps 58% as pandemic impairments spike
DUBAI, July 20 (Reuters) - Emirates NBD ENBD.DU on Monday posted a 58% fall in second-quarter profit as Dubai's largest bank made higher provisions in anticipation of further impact from the coronavirus pandemic.
Net profit slumped to 2 billion dirhams ($544.54 million) in the three months ended June 30, from 4.74 billion dirhams a year earlier, when it booked a gain of 2.1 billion dirhams from an asset sale.
"We are acting to manage costs to reflect lower levels of economic activity, albeit cost reduction will not entirely offset lower levels of income," Group Chief Financial Officer Patrick Sullivan said in a statement.
Sources told Reuters in June that the bank had started a new round of job cuts, laying off hundreds of employees.
Banks in the United Arab Emirates have been impacted by tough measures enforced by the government to curb the spread of the coronavirus, which forced many businesses to temporarily shutter.
Many of those restrictions have eased since May, though Dubai, which does not have the oil wealth of Abu Dhabi, remains particularly vulnerable as its economy is heavily dependent on tourism, transport and trade.
Emirates NBD said its impairment allowances increased to 4.2 billion dirhams by June-end, up from 2.6 billion dirhams in the first quarter, with an annualised net cost of risk of 172 basis points.
Its non-performing loan ratio was 5.8% at the end of the second quarter, and its total assets were 694.3 billion dirhams, up 29% from a year ago.
The bank's underlying operating performance remained "good" and the "robust" balance sheet would help it navigate the challenges of low interest rates, low oil prices and the impact of the pandemic, Sullivan said.
($1 = 3.6728 UAE dirham)
(Reporting by Alexander Cornwell, Editing by Sherry Jacob-Phillips)