Rating agency says bank will continue to benefit from role as house bank for Dubai government
Emirates NBD has resilience to face challenge of losing market lead position, Moody's says
Emirates NBD, Dubai's biggest bank by assets, will be able to surmount the challenge of losing its market leader position coupled with a weakening economy and rising interest rates, Moody's Investor Service said.
"Emirates NBD's unique position as the Dubai government's bank of choice, its large low-cost deposit base and healthy loan book will support its profitability as it negotiates the challenges of a more competitive environment, a weaker economy, and rising interest rates," says Mik Kabeya, Analyst at Moody's.
The rating agency noted that the lender would continue to finance infrastructure projects ahead of Expo2020 and that competition with First Abu Dhabi Bank would be softened by the limited overlap between the two lenders.
Emirates NBD said last week that its second-quarter profit rose 5.8 per cent, owing to higher loan rates, tighter expenses and lower provision costs.
At the same time the lender said that as a result of cost cuts last year, it is investing Dh1 billion in digital technology over the next three years - a move that is in line with underlying shifts in the banking industry.
Globally banks are increasingly streamlining their physical presence and investing in technology and digital wallets, shifting their focus to mobile services as they vie to increase their customer base.
The investment in digital is likely to reduce Emirates NBD's costs further.