File photo supplied by Emirates Islamic

Islamic Finance

Emirates Islamic first-quarter profit plunges 62% year-on-year on higher provisions

UAE’s Emirates Islamic reported net profit of 154.987 million dirhams ($42.2 million) for the first quarter of 2020, a 62% plunge compared to 411.079 million dirhams during the same period last year.

The bank has made higher provisions for potential bad loans.  

“This is a challenging time for businesses everywhere as we deal with the significant impact of COVID-19, combined with low oil prices and negative market sentiment,” said CEO Salah Mohammed Amin in a statement on Monday (Apr 20).

“Net profit is lower as we have made additional impairments allowances to boost coverage in anticipation of a deterioration in credit quality in subsequent quarters. Emirates Islamic provisions during the Q1-2020 reached AED 206 million, an increase of AED 224 million compared to the same period last year,” he added.

Apart from the anticipation of bad debts as customers are financially hit by the continuing pandemic, Emirates Islamic also has direct exposure to the troubled NMC Healthcare to the tune of 676.46 million dirhams, it said on Apr 5. The UAE’s largest private healthcare provider has been placed in administration following revelations of fraud and billions in debt.

Emirates Islamic’s income reached 641 million dirhams, 3% lower year-on-year.

Assets also dropped by 3% to 62.9 billion dirhams.

Customer deposits were almost flat at 44.79 million dirhams compared to 45.32 million dirhams for the three months ending Mar 31 in 2019.

Impaired financing ratio stands at 7.3% with a coverage of 126.5%, said the bank.

Emirates Islamic and its parent Emirates NBD are among banks that have offered customers measures to help alleviate financial stress as the COVID-19 pandemic continues.

These are on top of a 100 billion dirhams Targeted Economic Support Scheme rolled out by the UAE central bank on Mar 14 for retail and corporate customers, and stimulus packages from the Dubai government.

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