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Bond Market News

Moody’s Expect Emirates NBD to Roar Back to Pre-Pandemic Profitability by 2022

Moody’s has changed the outlook for long term bank deposits and senior unsecured ratings of Dubai based lender Emirates NBD (ENBD) to stable from negative. The rating agency affirmed the A3 long-term deposit ratings and A3 senior unsecured rating of Emirates NBD. It also affirmed the ENBD’s Baseline Credit Assessment (BCA) and Adjusted BCA at ba1. This reflects the rating agency’s view that ENBD is set to continue it’s strong performance on profitability, capitalization, funding and liquidity in the next 12-18 months.

Last month, ENBD reported a 17% jump in first half profit on stable margins, effective cost management and significant reduction in cost of risk due to improved business sentiment. Moody’s expects ENBD to continue to maintain it’s strong access to low cost current and savings accounts as a optimal source of funding. Coupled with diversified funding sources, the bank’s NPL ratios are expected to remain stable at around 6.3% in next 12-18 months. While economic activity in sectors such as hospitality, aviation, trade, tourism and retail in UAE is recovering, it remains below 2019 levels. Even so, Moody’s expects ENBD to continue its resilient path to pre-pandemic profitability by 2022. The rating agency highlighted ENBD’s early digital adoption as a key differentiating factor in the post pandemic world. ENBD’s bond performance have reflected the market’s confidence in its ability to navigate the current economic climate with the 6.125% Perps up 1.8% since the start of 2021 to currently trade at 110.13 yielding 3.72%.

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