Higher impairment charges hit UAE banks Emirates NBD and ADCB

Emirates NBD reported a net profit of 2.02 billion dirhams in the fourth-quarter. (Reuters)
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Updated 27 January 2020

Higher impairment charges hit UAE banks Emirates NBD and ADCB

DUBAI: Dubai's biggest lender Emirates NBD reported a 15 percent drop in fourth-quarter earnings on Monday, below analysts' forecasts, on a jump in impairment charges, sending its shares down around 1 percent.

The bank booked impairment charges of 2.06 billion dirhams ($560.88 million) in the quarter, up more than three times from a year earlier due to higher bad debt charges as it consolidated results of newly acquired Turkish lender DenizBank.

Even without DenizBank, impairment charges were up 78 percent on lower writebacks and recoveries. The bank did not give details of these charges.

Banks in the United Arab Emirates (UAE) are bracing for more writedowns from the real sector amid a downturn, especially in the Dubai property market.

Fitch Ratings recently warned a weakening property market in the UAE was likely to put more pressure on the asset quality of the banking sector.

Emirates NBD reported a net profit of 2.02 billion dirhams in the fourth-quarter, down from 2.39 billion dirhams in the same period a year earlier. EFG Securities had projected a net profit of 2.45 billion dirhams.

Full year profit, however, surged 44 percent, underpinned by double-digit growth in net interest income, stronger loan growth and gains from the listing of the bank's unit Network International.

Separately, Abu Dhabi Commercial Bank, the UAE's third-biggest bank, also reported a 16 percent drop in fourth-quarter profit on Monday, hurt by an increase in impairment charges.

Emirates NBD said it expected the Expo 2020 world fair to support multiple sectors in Dubai, but a softening real estate market remained a risk for 2020.


UAE dives into Lake Manzala project

Updated 39 min 45 sec ago

UAE dives into Lake Manzala project

  • Egyptian campaign aims to return the lake to its previous state and revive local fishing industry

CAIRO: The UAE National Marine Dredging Company (NMDC) has announced that it won the rights to the expansion project of Lake Manzala in Egypt, valued at 600 million UAE dirhams ($163 million).

The company’s announcement of the new project came following a disclosure published on the Abu Dhabi Securities Exchange website. It ensures compliance with the principle of disclosure and transparency in force in the UAE.

Lake Manzala is one of Egypt’s largest natural lakes. It is known for its potential fishing opportunities, as it has the basis for high fish stocks due to natural nutrients and a moderate climate throughout the year. It produces about half of the natural fish production in lakes.

The lake has witnessed neglect in recent years, losing much of its importance and wealth. In May 2017 Egyptian President Abdel Fattah El-Sisi launched a national project to develop Egyptian lakes, with a key focus on Lake Manzala.

NMDC said in a statement that winning the project came through its partnership with the Egyptian-Emirati Challenge Company. It said that it will take about two years to implement the project.

NMDC is one of the leading companies in the field of dredging, land reclamation and civil and marine construction in the Middle East. The Lake Manzala development project aims to improve the quality of water to restore free fishing and return the lake to its previous state, which will boost the local market and export output.

President El-Sisi said that Lake Manzala will contribute to enhancing Egypt’s fishing industry, and export operations will be activated after its full development. He directed the border governorates, in coordination with the Ministry of Interior and the Armed Forces, to remove all encroachments and criminal outposts on the lake.

Several days ago, Dakahlia governorate completed a difficult operation to remove encroachments on the lake. A large campaign that used Armed Forces Engineering Authority equipment removed 301 houses in the Abdo El-Salhy area in El-Matareya city, known as the “fishermen’s land,” which was built on areas that were filled in from the lake. The operation occurred after local fishermen were persuaded to obtain compensation for vacating their houses.

Magdy Zaher, executive director of Manzala Lake, said that the engineering authority used 320 excavators and 20 imported suction dredgers to work in the lake.

The authority dredged the upper islands isolated from the water with the help of an Emirati bulldozing company to increase the efficiency and purification of Lake Manzala.

Zaher said the lake project will require several steps.

The most important is the removal of encroachments on the water surface and doubling its area to 250,000 feddans, he said. Dredging and deepening the lake, opening the gates and extending the radial channels to allow Mediterranean waters to enter the lake will follow, he added.

A safety belt will come in the form of a road 80 km long and 30 meters wide, which will surround the lake and prevent future encroachments. It will also divert the course of the Bahr El-Baqar water treatment plant, which pours 12 million cubic meters of sanitary, industrial and agricultural drainage into the lake, Zaher said.