Loan provisions in Dubai banks during the first quarter of this year decreased by 645 million dirhams, or the equivalent of 30%, compared to the same period last year, reaching their lowest levels in years, in an indicator that embodies the strength of economic performance and the strong momentum of the business sectors in Dubai. Emirate and the UAE in general.
The financial statements of the national banks listed on the Dubai Financial Market showed that hard loan provisions during the first quarter of the year amounted to 1.5 billion dirhams, compared to 2.15 billion dirhams in the first quarter of 2022. This contributed to the doubling of the profits of the emirate’s banks to 9.7 billion dirhams, during the first quarter. From 2023, an increase of 102.9% over the same period last year.
Emirates NBD acquired the largest share of the total profits of the emirate’s banks, after it achieved 6 billion dirhams (including the profits of Emirates Islamic Bank) in the first quarter of 2023, compared to about 2.75 billion dirhams in the same period last year. The total assets of Emirates NBD increased by 5.4% to more than 782 billion dirhams at the end of the first quarter of this year, compared to 741.9 billion dirhams at the end of last year.
The bank recorded a decline of 66.3% in the value of loan provisions in the first quarter of the year, to reach 471.4 million dirhams, compared to 1.4 billion dirhams in the same period in 2022.
Mashreq Bank achieved a net profit of 1.6 billion dirhams in the first quarter of 2023, compared to 612.2 million dirhams in the same period last year, as a result of the decline in the cost of credit by 58% year-on-year, and the increase in operating profits.
The total assets of Mashreq Bank exceeded 201.2 billion dirhams at the end of the first quarter of this year, compared to 197.2 billion dirhams at the end of last year. The bank recorded a decline in the value of loan provisions in the first quarter of 2023 by 57.8%, to reach 96.3 million dirhams, compared to 228.4 million dirhams in the first quarter of 2022.
Dubai Islamic Bank recorded a 12% growth in net profits, reaching 1.506 billion dirhams at the end of the first quarter of this year, compared to 1.345 billion dirhams in the first quarter of 2022, on the back of higher main revenues and enhanced cost management efficiency.
Dubai Islamic also recorded a growth in assets by 291.9 billion dirhams at the end of the first quarter of this year, compared to about 288.2 billion dirhams at the end of last year. The bank raised loan provisions by 19.1% to 496.7 million dirhams in the first quarter of 2023, compared to 417 million dirhams in the first quarter of 2022.
Commercial Dubai’s profits increased to 575.2 million dirhams at the end of the first quarter of 2023, compared to profits of 431.3 million dirhams in the same period in 2022. Total operating income increased by 44%, to 1.24 billion dirhams, compared to 858.9 million dirhams in the same period. from last year.
The bank raised loan provisions by 335.8% to 326 million dirhams in the first quarter of 2023, compared to 74.8 million dirhams in the same period of 2022.
Emirates Islamic Bank achieved a record net profit of 601 million dirhams for the first three months, a growth of 76%, compared to 342 million dirhams in the same period last year.
. The total assets of Emirates Islamic Bank increased by 4% at the end of 2022 to reach 77.9 billion dirhams, and the total income grew by 74% compared to the same period of the previous year on the back of the increase in basic revenues as a result of the improvement in the mix of financing and deposits and the increase in profit rates that coincided with the increase in non-income. financier.
The bank recorded an increase in the value of loan provisions in the first quarter of 2023 by 424.7%, to reach 154.8 million dirhams, compared to provisions for impairment that were recorded in the same period of 2022, by about 29.5 million dirhams.
In the meantime, financial analyst Ahmed Negm confirmed that the practical conditions of banks improved in the first quarter of the year despite the unfavorable global economic conditions. Although we witnessed the exposure of some banks to difficult conditions in many countries of the world, local banks benefited from the strength of the economy. and growing business activities.
Najm explained that the strong local economic factors helped reduce credit risks and the risk of defaulting on loans, which led to a decline in hard loan provisions for some local banks, which benefited from the improvement in the credit quality of local companies.
He said, “The hard loan ratios have declined, which helped banks enjoy a portfolio of high-quality loans, especially as they adopt a good risk management approach, in addition to benefiting from the improvement in economic conditions in all sectors.” He added, “Dubai’s economy in particular, and the UAE’s economy in general, has maintained its strength despite the deterioration of global economic conditions and continued to be a prominent spot in the international arena.”
He continued: «Dubai was able to attract a large number of visitors compared to previous seasons and recorded strong levels of economic activity in the non-oil sectors amid more moderate inflation rates and lower cost of goods, and this helped tourism, trade and other sectors to record better levels of activity, and in addition to that, he continued The local economy has a positive outlook.
At the same time, stabilizing interest rate levels can help support current levels of economic activity, mitigating the risks of economic stress and a rapid tightening of financing conditions.
He pointed out that the decline in loan provisions, the improvement in the strength of the local economy, the rise in interest rates, and the expansion of profit margins provide local banks with the appropriate conditions for developing their profits, pointing out that UAE banks are heading towards high dividend rates, given the strong performance recorded in the past year and the increasing profits.
He added that banks seek to provide additional financial benefits through these distributions to reward existing shareholders and attract new investors, and the possibility of providing ever-increasing dividends year after year is evidence of the strength of the financial institution and its ability to produce profits. He stressed that the percentage of dividends in the UAE is among the highest in the region, which is especially important compared to other regions in the world.
For his part, Devesh Mamtani, Head of Investments and Advisory Services at Century Financial, said that banks in Dubai have shown flexibility and optimism by reducing loan provisions in the first quarter of 2023, despite the global challenges resulting from the pandemic, low oil prices and trade tensions. .
He added: «This step reflects the improvement of the local economy and the strength of the banking sector in the country, as the Dubai economy has recovered strongly, especially in the real estate and tourism sectors, and the banking sector in the UAE has benefited from improved market conditions and government support.
For example, the Targeted Economic Support Plan (TESS) approved by the Central Bank contributed to helping banks and customers deal with financial crises. He stated that the favorable economic environment attracted a large inflow of capital from foreign investors with high net worth, which contributed to the positive financial performance of major banks by improving the quality of assets, the ability of borrowers to repay and reducing maturities.
And he continued: «Emirates NBD Bank, the largest bank in Dubai in terms of assets, doubled its net profit in the first quarter to a record level, so provisions decreased, net interest income increased, and the bank’s credit quality improved as a result of the significant recovery that reflects regional economic growth, and the net profit of Dubai Bank increased. Islamic in the first quarter of 2023 by 12% year-on-year, thanks to the increase in revenues. These results reflect the improvement of economic conditions in the UAE and the bank’s cautious risk management.
He added: «Mashreq Bank recorded a 96% increase in its operating profit in the first quarter, as a result of healthy operating income growth in the UAE and other countries. As a result of improving the quality of assets and increasing their recoveries.