Emirates NBD, Dubai's largest bank, reported a 24% drop in its first-quarter profit
Emirates NBD set aside about $700 million in the first quarter to cover bad loans, giving investors a glimpse at the damage the coronavirus and lower oil prices are wreaking on bank earnings in the Gulf.
Dubai’s biggest bank increased impairments more than four times, resulting a 24% drop in its first-quarter profit, according a statement.
The lender boosted provisions for a potential deterioration in credit quality in the coming quarters due to the coronavirus pandemic, it said.
Banks in the six-member Gulf Cooperation Council face an “earnings shock” from the plunge in oil prices and the coronavirus pandemic, according to S&P Global Ratings.
Profit growth at Qatar National Bank stalled in the first quarter, while Dubai’s Mashreq Bank recorded a 28% drop and Oman’s Bank Muscat posted a 27% decline.
Business conditions in Dubai worsened in March to the lowest level since IHS Markit began compiling its purchasing managers’ index a decade ago. Banks might get a boost in the coming months after the United Arab Emirates cut required reserves for demand deposits, and unlocked more stimulus to support lending.
Dubai’s Emirates NBD revealed a $203 million exposure to NMC Health earlier this month.