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MarketScreener Homepage  >  Equities  >  Dubai Financial Market  >  Emirates NBD Bank PJSC    EMIRATESNBD   AEE000801010

EMIRATES NBD BANK PJSC

(EMIRATESNBD)
  Report
End-of-day quote. End-of-day quote Dubai Financial Market - 08/13
9.75 AED   +2.63%
07/28Coronavirus hits Gulf banks in Q2 but full impact of bad loans looms
RE
07/20Saudi shares fall after news king in hospital
RE
07/10EMIRATES NBD BANK PJSC : half-yearly earnings release
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Coronavirus hits Gulf banks in Q2 but full impact of bad loans looms

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07/28/2020 | 09:52am EDT

* Most Gulf banks' profits hurt by impairment charges

* Repayment deferral schemes mask scale of bad loans

* More pressure on banks' provisioning seen in H2 - analysts

DUBAI, July 28 (Reuters) - Most Gulf banks' profits plunged in the second quarter after a spike in impairment charges for expected credit losses, as regional economies reel from the double blow of low oil prices and the coronavirus outbreak.

But the banks may need to set aside even more money in the second half of the year to cover bad loans, as their full impact on banks has so far been curbed by stimulus measures allowing debt repayment delays, analysts say.

"Given that we have payment holidays, the current asset quality metrics as measured by the non-performing loans, still does not fully reflect the true size of these non-performing loans," said Ashraf Madani, a senior analyst at Moody's.

"Hence we expect further pressure on provisioning charge once those NPLs (non-performing loans) get reflected in the financial position of banks and as they move to stage 3."

Stage 3 loans are NPLs that require significant writedowns.

Saudi Arabia's largest lender, National Commercial Bank , saw its quarterly profit drop by 22.3% year on year to 2.1 billion riyals ($559.97 million) due to a decline in operating income and higher operating expenses.

"Total operating expenses including impairments were higher by 18.4% mainly due to higher net impairment charge for expected credit losses," the bank said in a bourse filing this week.

Emirates NBD, Dubai's largest bank, last week announced a 58% fall in second-quarter profit. It set aside over $1.1 billion so far this year to cover bad loans.

First Abu Dhabi Bank, the UAE' biggest lender, reported a 25% fall in profit on Tuesday, dragged down by another quarter of higher impairment charges.

DELINQUENCIES

Malik Zahir, chief investment officer for equity asset management at Bahrain-based SICO, said that compared to the first quarter, the increase in provisions among Gulf banks was not significant but that they will likely rise in the second half of the year.

"Almost all regulators have instructed the banks to defer loan instalments of clients exposed to the lockdown by circa six months, this has limited the growth in delinquency."

"In the case of the UAE, companies' layoffs have just started to gather pace, so we would see the delinquencies emanating from this probably in the third quarter," he said.

In Qatar, profits dropped sharply in the second quarter for Qatar National Bank, the Gulf's largest lender, which increased loan loss provisions to 1.5 billion riyals from 605.5 million a year earlier.

Qatari banks' profits and asset quality are likely to weaken this year, Fitch Ratings said this week, but the true impact will be masked in the short term by loan deferral schemes and regulatory flexibility for banks to recognise impairments under IFRS9 - an accounting rule introduced after the global financial crisis.

Dubai-based Arqaam Capital said on Tuesday that it expected total dividends per share and dividend pay-out ratios "to be cut substantially or fully cancelled" this year for most Gulf lenders. (Editing by Emelia Sithole-Matarise)

Stocks mentioned in the article
ChangeLast1st jan.
EMIRATES NBD BANK PJSC 2.63% 9.75 End-of-day quote.-25.00%
EURO / DIRHAM (EUR/AED) -0.06% 4.3383 Delayed Quote.4.68%
FIRST ABU DHABI BANK P.J.S.C. 0.91% 11.08 End-of-day quote.-26.91%
LONDON BRENT OIL -0.29% 45.08 Delayed Quote.-32.59%
THE NATIONAL COMMERCIAL BANK 0.27% 37.1 End-of-day quote.-24.67%
US DOLLAR / DIRHAM (USD/AED) 0.00% 3.6728 Delayed Quote.0.00%
WTI -0.22% 42.335 Delayed Quote.-32.22%
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Financials
Sales 2020 24 102 M 6 562 M 6 562 M
Net income 2020 8 215 M 2 237 M 2 237 M
Net Debt 2020 - - -
P/E ratio 2020 8,34x
Yield 2020 2,99%
Capitalization 61 586 M 16 767 M 16 768 M
Capi. / Sales 2020 2,56x
Capi. / Sales 2021 2,52x
Nbr of Employees 0
Free-Float 38,9%
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Mean consensus BUY
Number of Analysts 11
Average target price 11,45 AED
Last Close Price 9,75 AED
Spread / Highest target 62,1%
Spread / Average Target 17,4%
Spread / Lowest Target -7,69%
EPS Revisions
Managers
NameTitle
Shayne Kieth Nelson Group Chief Executive Officer
Ahmed bin Saeed Al-Maktoum Chairman
Abdulla Qassem Group Chief Operating Officer
Patrick Sullivan Chief Financial Officer
Rio Tinto Miguel Chief Information Officer
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