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Bnreport Business News Report


UAE’s two biggest banks are witnessing Profits decline

UAE's two biggest banks, National Bank of Dubai and First Abu Dhabi Bank, reported a decline in profits last year.
UAE's two biggest banks reported profits decline last year.

UAE’s two biggest banks, National Bank of Dubai and First Abu Dhabi Bank, reported a decline in profits last year.

The two banks have set higher provisions to cover the expected rise in bad loans due to the Coronavirus pandemic.

National Bank of Dubai, the largest bank in the emirate, said its full-year profits declined to more than the half. Provisions for impairment increased by 65% ​​to 7.9 billion dirhams ($2.15 billion).

Lower profits

The bank said profits fell to 7 billion dirhams due to higher impairment fees. The gains from selling a stake in the Network International Holdings Plc in 2019 were not repeated.

First Abu Dhabi Bank, is preparing for credit losses amid a profit shock from lower oil prices and the Coronavirus pandemic.

The largest bank in the UAE said it posted a profit of 10.6 billion dirhams for 2020, down from 12.5 billion dirhams in the same period a year ago.

Bank impairment charges increased by 22%.

Standard and Poor’s expected that the economy and the banking sector in the UAE would be affected by 2020 shocks. Local banks are facing declining asset quality and increasing risk costs.

Banking sector

The credit rating agency said banks would be affected by the UAE Central Bank raising the facilities it announced to gradually mitigate the Coronavirus repercussions, in the second half of 2021.

S&P said, due to low-interest rates, the profitability of banks will remain low in 2021. It is likely to record losses in some banks.

Sectors such as real estate, hospitality and retail are likely to remain under pressure this year.

IMF said the UAE’s GDP growth recovered during the year after the severe recession in 2020.

S&P said the real GDP (denominated in dollars) would return to 2019 levels, by 2023.

The UAE banks have also suffered a double blow due to the COVID-19 repercussions, and oil prices drop.

The global pandemic affected significant sectors such as tourism and real estate.

Forty-eight banks operate in the UAE, including 22 local banks and 26 foreigners, serving more than 9.5 million citizens and residents.


More Contraction Than Estimated Expected For UAE Economy This Year

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