Emirates NBD's Q4 profit rises 3% on continued economic momentum

Full-year net income hit a record Dh21.5 billion in 2023, rising 65 per cent on an annual basis as asset base grew

Emirates NBD's non-funded income for the three months increased by 18 per cent to Dh2.5 billion. Reuters

Emirates NBD, Dubai's biggest lender by assets, recorded a 3 per cent rise in its fourth-quarter net profit as continued economic momentum in the UAE and the broader Mena region drove income.

Group net profit for the three months to the end of December rose to Dh4 billion ($1.1 billion), the lender said on Thursday in a filing to the Dubai Financial Market, where its shares are traded.

Total quarterly income increased by 5 per cent annually to Dh10.3 billion, driven by a 2 per cent year-on-year rise in the bank's net interest income to Dh7.8 billion.

Non-funded income for the three months surged by 18 per cent to Dh2.5 billion.

The rise in quarterly net profit reflects “a healthy regional economy and the success of the group’s diversified business model”, said Sheikh Ahmed bin Saeed, chairman of Emirates NBD.

Banks in the UAE and the six-member economic bloc of GCC are benefitting from the continued economic growth momentum despite global headwinds. Economies in the broader Middle East and North Africa, especially oil-exporting Gulf nations have bounced back strongly from the pandemic-induced slowdown, driven by both oil and non-oil economic sectors.

The UAE, the Arab world’s second-largest economy, expanded 3.7 per cent annually in the first half of 2023, driven by strong non-oil sector growth as the country continues to pursue its diversification goals, Minister of Economy Abdulla bin Touq said in October.

Last month, the Central Bank of the UAE increased its 2024 growth forecast for the country's economy to 5.7 per cent, from its earlier estimate of 4.3 per cent, due to an expected rise in oil production next year.

Gross domestic product of Dubai, the home market of Emirates NBD, expanded by an annual 3.3 per cent in the first nine months of last year, the latest government data released this month showed.

The emirate, one of the main commercial, tourism and financial hubs of the Middle East, posted a GDP expansion of 3.2 per cent annually in the first half of last year, driven by growth in sectors such as transport, trade, financial services, accommodation and food services, property, information and communication, and manufacturing.

The banking sector in the UAE is well capitalised with adequate liquidity buffers and remains resilient against the risk of stagflation and market uncertainties, the Central Bank said in July.

Emirates NBD said its full-year net income hit a record Dh21.5 billion in 2023, rising 65 per cent on an annual basis as asset growth, a stable low-cost funding base, increased transaction volumes and substantial impaired loan recoveries drove income.

Total income jumped 32 per cent in December to Dh43 billion driven by “excellent deposit mix, solid loan growth and strong fee and commission growth across all business segments”, the bank said.

Impairment for bad loans and advances dropped by 33 per cent year on year Dh3.45 billion.

“Credit quality improved substantially on significant recoveries with the impaired loan ratio improving to 4.6 per cent, the lowest level since 2009,” Shayne Nelson, group chief executive said.

Emirates NBD posted 5 per cent loan growth last year to Dh481 billion, as retail financing hit the record Dh70 billion mark. Customer deposits at the end of December grew 16 per cent annually to Dh585 billion.

Total assets at the end of last year jumped 16 per cent annually to Dh863 billion.

The bank said its “rock-solid balance sheet makes” it a regional powerhouse and all its business units have delivered robust performance.

“Our network in the Kingdom of Saudi Arabia expanded to 15 branches and we refreshed our branch presence in Egypt, enhancing our international footprint and digital capabilities to drive further growth,” it said.

The Emirates NBD board has also proposed a 100 fils dividend in addition to 20 fils special dividend to celebrate its 60th anniversary, doubling last year’s dividend.