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Emirates NBD earns highest NII in Q3,2024

Emirates NBD earns highest NII in Q3,2024
19 Nov 2024 16:51

A.SREENIVASA REDDY (ABU DHABI)

Emirates NBD booked the highest net interest income (NII) of $2.31 billion among the top five Gulf banks, according to S&P Global Market Intelligence data.

NII is a key metric in the banking industry, representing the difference between the revenue a bank earns from its interest-bearing assets (such as loans, mortgages, and securities) and the expenses it incurs on its interest-bearing liabilities (including deposits, borrowed funds, and other forms of debt).

Net interest margin (NIM) — another key measure of bank interest earnings — was 3.75% in the quarter for Emirates NBD, attributed to "upside" in the group's Istanbul-headquartered DenizBank unit, CFO Patrick Sullivan said during an earnings call. NIM reflects the efficiency of a financial institution in earning interest income relative to the cost of generating that income.

All five major banks in the GCC — Qatar National Bank (QNB), First Abu Dhabi Bank (FAB), Saudi National Bank (SNB), Emirates NBD, and Al Rajhi Banking & Investment Corp. — reported higher third-quarter NII, S&P Global Market Intelligence data showed.

The continued increase in NII allowed most of these banks to report higher quarterly earnings. QNB, FAB, SNB, and Al Rajhi all recorded net income growth.

The banks also benefited from year-over-year loan growth during the period, with QNB posting the highest growth at 11%. FAB and SNB also recorded double-digit loan growth, while Al Rajhi's was 9.90%. Emirates NBD’s loan growth stood at 8.51%.

Experts fear that NII and NIM might decrease in the coming months due to anticipated interest rate cuts. US Federal Reserve interest rate cuts are expected to affect GCC banks' interest income as most GCC currencies are pegged to the US dollar.

“Rate cuts in the final three months of 2024 and continuing until 2026 will negatively impact GCC banks as interest-earning assets will reprice faster than interest-bearing liabilities,” Fitch Ratings noted.

In its October report, Fitch stated that it expects the US Fed to reduce rates by another 200 basis points by July 2026. Most GCC central banks are obliged to follow the Fed’s policy.

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