Emirates NBD’s profit surge 130% to a record AED 12.3 billion in the first half of 2023 on strong Current and Savings Accounts growth coupled with a healthy increase in lending. Q2-23 is also a record quarter with income growing to AED 10.8 billion and profit rising to AED 6.2 billion, reflecting the buoyant regional economy. The exceptional profitability reflects higher margins, growing non-funded income and a lower cost of risk on significant recoveries. Emirates NBD’s market-leading deposit franchise added AED 53 billion of deposits including AED 37 billion of low-cost Current and Savings Accounts. Success in record Retail Lending growth and Corporate Lending closing key deals across the region drove 5% loan growth, with guidance revised positively upwards. All business units delivered higher income and profit. The Group’s investment in technology and AI enabled the agile launch of new digital products and services which is driving business growth. The rock-solid balance sheet makes Emirates NBD a regional powerhouse leading to Emirates NBD being recognised as ‘Best Bank in the Middle East’ and ‘Best Bank in the UAE’ at the Euromoney Excellence Awards 2023.
Key Highlights – First Half 2023
- 130% profit growth on higher margins, improved deposit & loan mix and substantial recoveries
- Total income up 50% to AED 21.3 billion on excellent deposit mix with higher interest rates feeding through to margins and strong growth across all business segments and products
- Deposit mix is a key strength. Deposits grew AED 53 billion in H1-23 including AED 37 billion of low-cost Current and Savings Accounts
- Loans up an impressive 5% in H1-23 with record Retail lending and Corporate closing key deals across the region leading to guidance revised positively upwards
- Net interest margin rose significantly by 110 basis points y-o-y to 3.96%
- Impairment allowances substantially down 50% y-o-y as credit quality improved, reflecting the Group’s prudent approach to credit provisions
- Balance Sheet surpasses AED 800 billion milestone for the first time ever
- Earnings per share up significantly by 138% to 190 fils, underlying up 92% to 211 fils
- Awarded ‘Best Bank in the Middle East’ and ‘Best Bank in the UAE’ at the Euromoney Excellence Awards 2023
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Emirates NBD’s investment in technology, AI and Advanced Analytics is driving new customer focused services & products, and propelling future business growth
- Real-time FX rates offered to customers, reinforcing our position as the UAE’s frontrunner in FX
- ‘ENBD X’ enhanced mobile banking app rolling out, delivering a new standard in customer service
- Liv refreshed, offering Gen Now an exciting all-purpose digital-banking companion
- One-third market share of UAE Credit Card spend
- ‘Emirates NBD Pay’, our Merchant Acquiring service, collected over AED 1 billion in first 100 days
- First local currency issuer of Dirham bonds and sukuks following the Ministry of Finance’s development of local yield curve
- Trade API integration with DEWA completed, becoming the only UAE bank to digitize this process, offering customers simplified end-to-end Straight Through Processing
- Global Custody Services launched on DFM and ADX, providing regional and overseas clients with secure and efficient safekeeping of assets across multiple geographies
- Instant trading on ADX. Emirates NBD Securities provides digital onboarding and instant trading access to ADX’s listed companies
- Project Finance facility provided for one of UAE’s largest corporates
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Looking to the future as the UAE hosts COP28, Emirates NBD is delivering ESG solutions to customers as their net-zero ambitions and sustainability goals drive economic activity
- Carbon Trading introduced as Emirates NBD becomes first UAE bank to empower customers to manage carbon emissions offsetting, helping align with UAE’s Net Zero action plan
- Innovative green financing solutions provided to our regional and global clients
- ESG 75% of cards issued now eco-friendly bio-cards, reducing plastic consumption
- ESG commitment reinforced with four further branches in the UAE and KSA achieving LEED Platinum and LEED Gold certifications
- UAE Gender Balance Pledge signed further solidifying Group’s commitment to gender equality and diversity
Hesham Abdulla Al Qassim, Vice Chairman and Managing Director said:
- “Emirates NBD’s profit hit a record high of AED 12.3 billion for the first half of 2023 reflecting the Group’s growing regional presence and visionary investment in technology & AI which is driving new product delivery and propelling growth.
- Emirates NBD proudly celebrates its 60th anniversary, having grown to be one of the region’s leading banks, serving over 20 million customers across 13 countries. We are committed to playing a key role in driving further economic growth and development across the region.
- Emirates NBD looks forward to welcoming COP28 to the UAE and we are pleased to offer exciting ESG solutions to our customers to empower them to meet their net-zero ambitions and sustainability goals.
- I am delighted that Emirates NBD was recognized as the ‘Best Bank in the Middle East’ and ‘Best Bank in the UAE’ at the Euromoney Excellence Awards 2023.”
Shayne Nelson, Group Chief Executive Officer said:
- “Emirates NBD delivered record income for the first half of 2023, rising by 50% to
AED 21.3 billion, driven by an excellent deposit mix and strong lending growth.
- Our market-leading deposit franchise added AED 53 billion of deposits including
AED 37 billion of low-cost Current and Savings Accounts.
- Record Retail lending and success in closing key Corporate lending deals across the region drove loan growth 5% higher, underlining the strength of our regional presence.
- The Group’s earlier investment in technology provides a bedrock to launch many exciting new products & services and harness the power of generative AI to further transform Emirates NBD’s operations and enhance productivity.”
Patrick Sullivan, Group Chief Financial Officer said:
- “All business units generated a substantial increase in income, helping Emirates NBD deliver its strongest ever half-year for both income and profit.
- The Group’s success in growing an inexpensive and diversified funding base has positioned the Bank to continue benefiting from higher interest rates.
- The Group is forward looking as it invests higher income to drive future efficiencies and new revenue streams.
- Impairment allowances are substantially lower, with a 50% y-o-y improvement reflecting the Group’s prudent approach to credit provisions
- Strong lending growth of 5% in the first half of 2023 enables the Group to revise loan growth guidance positively upwards.
- The UAE’s economy continues to perform strongly, and the Group’s solid balance sheet is supporting its customers and help them grow both locally and internationally.”
Financial Review
Rounding differences may appear throughout the document
Operating Performance
Total income for H1-23 is up 50% y-o-y and up 3% q-o-q to AED 21.3 billion. Net interest income is up 53% y-o-y on an excellent deposit mix with higher interest rates feeding through to margins and strong growth across all business segments and products. Non-funded income is up 44% y-o-y from increased local and international card transactions, coupled with growth in FX & Derivative income.
Expenses remain well controlled with the H1-23 cost to income ratio within guidance at 25.6% reflecting stronger income enabling accelerated investment in AI and international growth to drive future business growth.
Impairment allowances in H1-23 are substantially lower, down 50% y-o-y, reflecting strong recoveries and the healthy operating environment.
Quarterly profit rises to AED 6.2 billion on the back of higher income, the highest ever quarterly profit delivered by a UAE bank.
Balance Sheet Trends
Lending increased during H1-23 by AED 23 billion with the conventional and Islamic retail franchise having its strongest ever half-year for acquisition of loans
Deposits grew by AED 53 billion in the first half of 2023, including a AED 37 billion increase in Current and Savings Account balances helping maintain a stable, efficient funding base.
Liquidity remains strong with the Liquidity Coverage Ratio at 217% and the Advances to Deposits Ratio at 79%.
During the half year, the Non-Performing Loan ratio improved to 5.6% on significant writeback and recoveries whilst the Coverage ratio strengthened to 147%, demonstrating the Group’s continued successful approach to loan management and its prudent approach towards credit risk management.
As at 30 June 2023, the Group’s Common Equity Tier 1 ratio is 16.6%, Tier 1 ratio is 18.4% and Capital Adequacy ratio is 19.5%
Business Performance
- Retail Banking and Wealth Management (RBWM) had an excellent first half with highest ever revenue, strongest ever acquisition of loans and a substantial growth in balance sheet.
- Robust business momentum continues with loan origination up 23% y-o-y and Credit Card acquisitions up 31% y-o-y
- One-third market share of UAE Credit Card spend as card spends grew 30% y-o-y
- Lending increased by a record AED 12 billion and Deposits grew by AED 24 billion in first half of 2023
- Income grew 40% y-o-y as RBWM delivered its highest ever half yearly revenue and non-funded income
- ‘ENBD X’ enhanced mobile banking app rolling out, delivering a new standard in customer service
- Liv refreshed, offering Gen Now an exciting all-purpose digital-banking companion
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Corporate and Institutional Banking capitalised its strategic partnership with major Government entities and Corporates by enhancing digitized service platforms.
- Profitability jumped 116% on increased customer hedging, higher Trade Finance, CASA and Investment Banking income and strong recoveries
- Strong new lending and CASA growth
- Emirates NBD Securities provides digital onboarding and instant trading access to ADX’s listed companies
- BusinessONLINE services expanded and launched in India and KSA
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Global Markets and Treasury delivered an outstanding performance, contributing AED 2 billion in revenue during the first half of 2023.
- Income rose fivefold driven by favourable balance sheet positioning coupled with a significant increase in banking book investment income
- Emirates NBD took the lead in offering carbon futures trading ahead of COP28, empowering customers to offset their carbon emissions
- The product offering was further enhanced with real-time FX rates now available to customers
- The trading desk delivered another solid performance despite volatile market conditions
- Sales revenue increased by 54% with income from structured products growing by 63%
- DenizBank profit up 234% to AED 1.9 billion helped by higher income and strong recoveries.
Outlook
GCC economies have been resilient against a weaker global backdrop and higher interest rates. PMI surveys indicate robust activity in non-oil sectors in the first half of 2023 across the region. Emirates NBD Research revised their forecast for UAE growth in 2023 to 2.9% from 3.2% on the expectation of a contraction in hydrocarbon GDP although we revised up our forecast for UAE non-oil GDP growth to 5.0% this year, from 3.5% previously. The UAE’s national energy strategy expects up to AED 200 billion of investment as it triples the contribution of renewable energy by 2030. Other economic sectors such as tourism are flourishing with Dubai tourist numbers recovering close to pre-pandemic levels. In the wider MENAT region, Egypt made successful asset sales reflecting their commitment to revamp the economy and Türkiye increased interest rates to help address inflation.
UAE
