Originally posted to the Reuters website, 27 January 2020
DUBAI (Reuters) – Dubai’s biggest lender Emirates NBD ENBD.DU reported a 15% drop in fourth-quarter earnings on Monday, below analysts’ forecasts, on a jump in impairment charges, sending its shares down around 1% .
The bank booked impairment charges of 2.06 billion dirhams ($560.88 million) in the quarter, up more than three times from a year earlier due to higher bad debt charges as it consolidated results of newly acquired Turkish lender DenizBank.
Even without DenizBank, impairment charges were up 78% on lower writebacks and recoveries. The bank did not give details of these charges.
Banks in the United Arab Emirates (UAE) are bracing for more writedowns from the real sector amid a downturn, especially in the Dubai property market.
Fitch Ratings recently warned a weakening property market in the UAE was likely to put more pressure on the asset quality of the banking sector.
Emirates NBD reported a net profit of 2.02 billion dirhams in the fourth-quarter, down from 2.39 billion dirhams in the same period a year earlier. EFG Securities had projected a net profit of 2.45 billion dirhams.
Full year profit, however, surged 44%, underpinned by double-digit growth in net interest income, stronger loan growth and gains from the listing of the bank’s unit Network International (NETW.L).
Separately, Abu Dhabi Commercial Bank ADCB.AD, the UAE’s third-biggest bank, also reported a 16% drop in fourth-quarter profit on Monday, hurt by an increase in impairment charges.
ADCB shares were trading 1.8% lower in early trade.
Emirates NBD said it expected the Expo 2020 world fair to support multiple sectors in Dubai, but a softening real estate market remained a risk for 2020.
Link to the original post : https://www.reuters.com/article/us-emirates-nbd-results/higher-impairment-charges-hit-uae-banks-emirates-nbd-and-adcb-idUSKBN1ZQ0NI
