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Emirates NBD on Monday declared a 24 per cent year-on-year decline in net profit for the first quarter of 2020 due to higher provisions the bank took in anticipation of the impact of the new coronavirus outbreak on credit conditions.

The bank posted a net profit of Dh2.08 billion ($566.29 million) in the quarter, down from Dh2.74 billion in the same period a year earlier. On a quarterly basis, however, net profit improved by 3 per cent.

“Net operating profit declined 24 per cent year-on-year as the group took additional impairment allowances to increase coverage in anticipation of a deterioration in credit quality in subsequent quarters,” Patrick Sullivan, the group chief financial officer, said in a statement.

Banks in the United Arab Emirates are feeling the impact of measures aimed at containing the outbreak, which have brought parts of the economy such as tourism and transport to a near halt.

“Regional banks face multiple challenges from low interest rates, low oil prices and lower economic growth due to disruption from Covid-19,” said Sullivan. The operating performance of the bank was good prior to the emergence of the economic impact of Covid-19, he said.

The bank increased impairment allowances to Dh2.6 billion, with an increase in the annualised net cost of risk of 210 basis points.

Its non-performing loan ratio was stable at 5.5 per cent in the quarter, and total assets increased by 1 per cent from the end of 2019 to Dh692 billion.

“Emirates NBD has a good underlying operating performance, coupled with a robust balance sheet to help navigate these challenges. The group continues to operate with strong liquidity and healthy capital ratios,” Sullivan said.