Emirates NBD, the biggest lender by assets in Dubai, reported a 45 per cent year-on-year decline in its first-half net profit as provisions for expected loan losses increased due to the Covid-19 pandemic. Net profit for the six months ending June 30 slipped to Dh4.1 billion, the lender said in a statement on Monday to the Dubai Financial Market, where its shares trade. A non-repeated gain from the disposal of a stake in its payments arm Network International in the second quarter of 2019 also affected its like-for-like figures. Excluding that gain, net profit fell 24 per cent, ENBD said. The lender increased its impairment allowances for stage-one and stage-two loan coverage in anticipation of a potential deterioration in credit quality in subsequent quarters due to the pandemic. Impairment allowances during the period increased to Dh4.2bn from Dh1.23bn year on year. The annualised net cost of risk rose to 172 basis points after the lender raised its expected credit loss allowances. The bank's second-quarter net profit stood at Dh2bn, down from Dh4.74bn a year ago. “The group’s balance sheet remains strong with stable credit, capital and liquidity,” Shayne Nelson, group chief executive of ENBD, said. “Emirates NBD’s solid capital base along with an ability to generate healthy operating profits, provides a strong loss-absorption capacity.” The lender provided financial relief to about a tenth of its customers in the first half, primarily through the deferral of more than Dh8bn in interest and principal repayments for up to six months. It also waived fees to help individual clients and businesses cope with disruptions caused by the health crisis, Mr Nelson said. The bank's business volumes have improved as the economy reopens, he said. Lenders around the world face tough operating conditions as profits decline amid slow loan growth and lower interest rates. The world economy is set to slide into its deepest recession since the Great Depression, with the International Monetary Fund projecting a 4.9 per cent contraction this year and a sluggish recovery in 2021. The UAE has reopened its economy gradually as the number of Covid-19 cases falls and business activity has picked up on the back of monetary and fiscal support. The country was the first in the Mena region to introduce economic stimulus measures, including zero interest funding to banks to boost lending growth. It also unveiled other initiatives such as discounted utility bills and fee waivers. Emirates NBD reported that its total income grew by 33 per cent to Dh12.6bn, helped by higher fee income from the inclusion of its Turkish unit, DenizBank. Net interest margin also improved by seven bps from a year ago to 2.84 per cent. The lender said its total assets at the end of the first half stood at Dh694bn, a growth of 2 per cent from the end of 2019. Loan growth was up 1 per cent to Dh461bn during the period while customer deposits fell by 2 per cent to Dh461bn. The bank’s non-performing loans ratio rose to 5.8 per cent and its coverage ratio for the period stood at 116.9 per cent. Liquidity coverage ratio of 152.5 per cent and the advances-to-deposits ratio of 96.1 per cent "demonstrate a healthy liquidity position", the bank said. Emirates NBD also said in a separate filing to the DFM on Monday it has received all of the approvals needed to increase its foreign ownership limit to 40 per cent, from the current 20 per cent. The bank will announce when the change will become effective at a later date.