(Bloomberg) — Emirates NBD PJSC first-half profit slumped 45% after it set aside $1.1 billion in provisions to cover an expected spike in bad loans brought on by the coronavirus pandemic.

Dubai’s biggest bank increased impairments allowances more than three times to 4.2 billion dirhams, according to a statement. Profit dropped to 4.1 billion dirhams due to the higher impairment charges and a gain on the sale of a stake in Network International Holdings Plc last year wasn’t repeated.

Emirates NBD joins regional competitors such as Qatar National Bank and Bank Muscat in increasing provisions as they face an “earnings shock” from the plunge in oil prices and the coronavirus pandemic. Pockets of existing vulnerabilities may yield rising nonperforming loans if the dual crises drag on, the International Monetary Fund said this month.

The crisis is also prompting a new wave of consolidation talk among banks in the Middle East, including potential mergers in Saudi Arabia and Qatar.

As Oil and Virus Drive Gulf Bank Mergers, Who’s Talking to Whom

Emirates NBD 1H numbers:

• Profit 4.1 billion dirhams vs 7.5 billion
• Excluding the gain from Network International, profit fell 24%
• Impairment allowances 4.2 billion vs 1.23 billion
• Total income 12.63 billion dirhams vs 9.53 billion
• Net interest income 9.31 billion dirhams vs 6.85 billion
• Cost to income ratio 31.7% vs 29.7%
• Net interest margin 2.84% vs 2.77%

“We are acting to manage costs to reflect lower levels of economic activity, albeit cost reduction will not entirely offset lower levels of income,” Group Chief Financial Officer Patrick Sullivan said in the statement. “Emirates NBD continues to have a good underlying operating performance, coupled with a robust balance sheet to help navigate these multiple challenges from low interest rates, low oil prices and lower economic growth due to disruption from Covid-19.”