Emirates NBD’s 2023 profit surges 65% to $5.8 billion | The Asian Banker
Sunday, 3 March 2024

Emirates NBD’s 2023 profit surges 65% to $5.8 billion

5 min read

Emirates NBD’s profit surges 65% to AED 21.5 billion ($5.8 billion) in 2023 on asset growth, a stable low-cost funding base, increased transaction volumes and substantial impaired loan recoveries.

The bank's fourth quarter profit for 2023 (Q4-23) reached AED 4 billion ($1.08 billion), up 3% y-o-y on higher income reflecting a buoyant regional economy. In light of the group’s excellent performance, the board of directors is proposing a 100 fils (AED 1,805.08 or $491.46) dividend plus 20 fils (AED 361 or $98.29) celebrating its 60th anniversary, doubling last year’s dividend.

Emirates NBD’s asset base jumped 16% in 2023 as the group’s market-leading deposit franchise grew AED 82 billion ($22.3 billion), with low-cost current and savings accounts adding an impressive AED 30 billion ($8.1 billion). Lending grew 5% on strong retail loan growth, coupled with AED 70 billion ($19.05 billion) new corporate lending. The rock-solid balance sheet makes Emirates NBD a regional powerhouse. Credit quality improved significantly with impairment charge down 33% and the impaired loan ratio improving to 4.6%, the lowest level since 2009. All business units delivered an outstanding 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. Emirates NBD were proud to be the principal banking partner for COP28.

Key Highlights – 2023

65% surge in profit on significant balance sheet growth, a stable low-cost funding base, increased transaction volumes and substantial recoveries

• Total income substantially up 32% to AED 43 billion ($11.7 billion) on excellent deposit mix, solid loan growth and strong fee and commission growth across all business segments
• Healthy asset growth of 16% to AED 863 billion ($234.9 billion) at end 2023
• Solid loan growth, up 5% on record retail financing momentum with AED 70 billion ($19.05 billion) of new corporate lending benefiting from our effective regional presence
• Deposit mix is a key strength growing a remarkable AED 82 billion ($22.3 billion) in 2023 including AED 30 billion ($8.1 billion) of low-cost current and savings accounts
• Net interest margin rose 52 basis points in 2023 to 3.95% on favourable loan and deposit mix and higher interest rates
• Impairment allowances substantially down 33% y-o-y due to exceptionally strong recoveries achieved through the year with impaired loan ratio improving to 4.6%
• Earnings per share up significantly by 68% to 332 fils (AED 5,992.6 or $1,631.57)

Emirates NBD’s investment in customer focused services and products is propelling business growth

• Record year for Emirates NBD Capital, with the investment bank raising $79 billion of capital on behalf of local, regional and international clients across 134 landmark deals
• Launched Tablet X, a tablet banking platform enabling instant account opening, immediate credit card issuance, personal loan request and fixed deposit opening
• New escrow management system introduced providing efficient escrow services
• SME lending grew significantly in the UAE, supporting this bedrock sector of the economy
• One-third market share of UAE credit card spend as card spend grew 25% y-o-y
• ‘ENBD X’ mobile banking app successfully rolled out, using latest technology, security and user experience trends propelling it to the #1 banking app in the region
• Digital wealth platform expanded access to global equities, facilitating over AED 1 billion ($272.2 million) investments since launch, elevating ENBD X as a one-stop banking and wealth management solution
• AUMs grew by an impressive 40% in 2023, reflecting Emirates NBD’s full service platform
• Fully digital business banking onboarding process, with over 70% of onboarding now digital
• KSA loan growth up significantly with retail lending accelerating 27% y-o-y as branch network expands to 15

Looking to the future, Emirates NBD is transforming into a data-first and digital-focused bank, delivering ESG solutions to customers as their net zero ambitions drive economic activity

• Carbon trading and real-time FX quotes enhance product offering
• Fractional bonds offered for first time by a regional bank, widening customer access to fixed income instruments
• Paperless cash solutions offered to corporate customers as part of on-going digitisation journey
• Generative AI implementation across business operations in partnership with Microsoft
• Implementing over 50 AI use cases to enhance digital customer service, risk analysis and operational efficiency
• Hub71 partnership to accelerate fintech innovation
• Innovation fund made exciting investment in Komgo to revolutionise its digital trade finance offering
• ESG-linked supply chain finance programme launched in collaboration with major corporates
• Net zero goals commitment by signing UAE Climate-Responsible Companies Pledge
• Reduced Scope 1 emissions by 8% and Scope 2 missions by 20% in 2023
• Gender equality commitment by signing UAE Gender Balance Pledge
• Sustainable Finance Framework published by Emirates NBD and DenizBank reinforcing group-wide dedication and allowing green and sustainability-linked bond issuance
• $750 million green bond issued, the largest ever from a bank in the MENAT region
• Microsoft sustainability manager implemented to drive digital transformation in sustainability operations
• Automated ESG scoring solutions provided by partnering with Coriolis ESG

Sheikh Ahmed Bin Saeed Al Maktoum, chairman, Emirates NBD, said: “Emirates NBD delivered its highest ever profit of AED 21.5 billion ($5.8 billion) in 2023, reflecting a healthy regional economy and the success of the group’s diversified business model.

  • Emirates NBD used its strong balance sheet to support economic growth in the UAE, providing over AED 70 billion ($19.05 billion) of new corporate lending, and a significant increase in lending to small and medium enterprises.
  • As a leading bank in the region, we were proud to be the Principal Banking Partner of COP28, underlining Emirates NBD’s commitment to the UAE’s Year of Sustainability.
  • We published our Sustainable Finance Framework, issued the largest ever green bond from a regional bank and committed to the UAE Climate-Responsible Companies Pledge and the UAE Gender Balance Pledge.
  • In light of the group’s excellent performance we are proposing a 100 fils (AED 1,805 or $491.44) dividend, and to celebrate our 60th Anniversary a further 20 fils (AED 361 or $98.29), doubling the total dividend to 120 fils (AED 2,166 or $589.72 ) per share.”

Hesham Abdulla Al Qassim, vice chairman and managing director said: “Emirates NBD generated a record AED 43 billion ($11.7 billion) of income on significant asset growth, a stable low-cost funding base, increased transaction volumes and substantial recoveries.

  • Higher income and lower impairment charges drove Emirates NBD’s profits 65% higher to a record AED 21.5 billion ($5.8 billion).
  •  AED 70 billion ($19 billion) of new corporate lending helped deliver an impressive 18% growth in corporate lending while retail financing grew by 19% as Dubai successfully continues to be a beacon of economic growth.
  • Our market-leading deposit franchise grew AED 82 billion ($22.3 billion) with low-cost current and savings accounts increasing by AED 30 billion ($8.16 billion), despite higher interest rates.
  • Our leading IT architecture enabled us to launch the award winning ‘ENBD X’ mobile banking app, which integrates our digital wealth platform, making it a one-stop, complete banking services solution.”

Shayne Nelson, group CEO said: “The group’s strong capital base enabled the balance sheet to grow 16% to AED 863 billion ($234.9 billion) in 2023.

  •  International operations now generate 39% of total income.
  • Emirates NBD has 15 branches in the Kingdom of Saudi Arabia with plans to increase our presence to 24 branches by 2025.
  • Credit quality improved substantially on significant recoveries with the impaired loan ratio improving to 4.6%, the lowest level since 2009.
  • With the UAE’s economy thriving, and the nation an attractive destination for ultra-high net-worth individuals from across the world, Emirates NBD competently caters to all sectors of the wealth spectrum.”

Business Performance

Retail banking and wealth management (RBWM) had a remarkable 2023 with the highest ever annual revenue, strongest ever loan acquisition and a substantial growth in balance sheet

  • Lending increased by a record AED 18 billion ($4.9 billion) and deposits grew by AED 35 billion ($9.5 billion) in 2023 with a healthy CASA to deposits ratio of 77%
  • One-third market share of UAE credit card spend as card spend grew 25% y-o-y
  • Income grew 31% y-o-y as RBWM delivered its highest ever annual funded and non-funded income
  • ‘ENBD X’ & ‘EI +’ mobile banking app successfully rolled out in the UAE, using latest technology, security and user experience trends, offering a market-leading array of products and services
  • Digital wealth platform expanded, giving customers access to over 11,000 global and regional equities, elevating ENBD X as a one-stop solution for both everyday banking and wealth management
  • AUMs grew by an impressive 40% in 2023, reflecting Emirates NBD’s full service platform

Corporate and institutional banking capitalised on its strategic partnership with major government entities and corporates by enhancing digitised service platforms

  • Profitability almost doubled y-o-y on higher margins due to rising interest rates, growth in lending activity, higher fee income across all products and strong recoveries
  • Corporate lending (ex. Sovereign) up 18%, driven by AED 70 billion ($19.05 billion) of new lending throughout the region, on strong origination in manufacturing, trade, transport, communication and conglomerates
  • Significant CASA growth helped efficiently manage cost of funding
  • Record year for Emirates NBD Capital, with the investment bank raising $79 billion of capital on behalf of local, regional, and international clients across 134 landmark deals
  • Enhanced key focus on sustainable financing across sectors with ESG-linked supply chain finance programme launched in collaboration with major corporates
  • Paperless cash solutions offered to corporate customers as part of on-going digitisation journey

Global markets and treasury delivered an outstanding performance, with profit doubling to AED 3.4 billion ($925.6 million) in 2023, driven by favourable balance sheet positioning and higher banking book investment income

  • The trading desk reported higher profits with foreign exchange trading posting 64% growth
  • Sales delivered strong growth, driven by structured products and foreign exchange
  • Emirates NBD is a leading primary dealer in the Dirham sovereign market and was the first bank to issue a Dirham denominated bond and Sukuk.
  • Product offering enhanced with real-time FX quotes and carbon trading offered to customers
  • First bank in region to offer fractional bonds, widening customer access to a range of fixed income instruments

DenizBank maintained profit at AED 1.6 billion ($435.6 million) and provided fresh funding to the economy, growing their balance sheet 19% to AED 147 billion ($40.02 billion)

Outlook

GCC economies have been resilient against a weaker global backdrop and higher interest rates. PMI surveys in the UAE and the Kingdom of Saudi Arabia indicate robust activity in non-oil sectors in the final quarter of 2023, with strong new order growth pointing to continued momentum into 2024. Emirates NBD Research expects 4.5% non-oil growth in the UAE and 4% non-oil growth in the Kingdom of Saudi Arabia, underpinned by continued investment and consumption. In the wider MENAT region, Egypt continues to explore asset sales, reflecting their commitment to revamp the economy and Türkiye increased interest rates to help address inflation.

Re-disseminated by The Asian Banker

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