Abu Dhabi, 18 July 2016

Abu Dhabi Commercial Bank PJSC ("ADCB" or the "Bank") today reported its half year financial results for the period ended 30 June 2016 ("H1'16").

Key highlights (30 June 2016)

Operating performance

Half year comparison (H1'16 vs. H1'15): Resilient performance despite challenging market conditions

-          Net profit of AED 2.147 bn was 15% lower, primarily on account of higher impairment allowances reflecting current market conditions

-          Operating income of AED 4.255 bn was up 1%; total net interest income of AED 3.099 bn was 3% lower, which was partially offset by higher non-interest income of AED 1.155 bn, up 10% over H1'15

 Quarter-on-quarter comparison (Q2'16 vs. Q1'16): Delivering strong results on a quarterly basis

 

-          Net profit of AED 1.126 bn, was up 10%

-          Operating income of AED 2.143 bn, was up 1%, impacted by higher funding costs

-          Non-interest income of AED 617 mn, was up 14%, primarily driven by higher fees and trading income

-          Operating profit before impairment allowances of AED 1.477 bn, was up 8%, benefiting from a tightly managed cost base. Q2'16 operating expenses decreased by 10% to AED 666 mn from AED 738 mn in Q1'16

    Disciplined cost management

-          H1'16 cost to income ratio of 33.0% was within our target range

-          Further improvements in cost base resulted in a cost to income ratio of 31.1% in Q2'16, compared to 34.9% in Q1'16, an improvement of 380 basis points over the previous quarter

    Strong balance sheet driven by strategically targeted growth opportunities and relentless focus on increasing CASA (current & savings account) deposits

-          Net loans[1] and advances to customers increased 6% to 155 bn over 31 December 2015

-          Deposits from customers increased 4% to AED 149 bn over 31 December 2015

-          Low cost CASA deposits of AED 66 bn increased 5% over 31 December 2015 and comprised 44.5% of total customer deposits compared to 44.1% as at 31 December 2015

    Continued focus on improving sources of funding and liquidity while capital position continues to remain robust

-          As at 30 June 2016, capital adequacy ratio was 18.40% and tier I ratio was 15.07%

-          Net lender of AED 21 bn in the interbank markets as at 30 June 2016

-          Investment securities increased to AED 25 bn as at 30 June 2016, an increase of 18% over year end

-          Strong liquidity ratio of 24.9% while advances to stable resources at a healthy 89.4%

    Improved asset quality metrics, maintaining a prudent and conservative approach to risk management

-          As at 30 June 2016, NPL and provision coverage ratios improved to 2.7% and 132.9% respectively, compared to NPL ratio of 3.0% and provision coverage ratio of 128.5% as at 31 December 2015

-          Collective impairment allowances were 1.96% of credit risk weighted assets, well above the minimum 1.5% stipulated by the UAE Central Bank

Commenting on the results, Eissa Mohamed Al Suwaidi, Chairman said:

"In the first half of 2016, ADCB continued to deliver strong results despite the increasingly challenging operating environment. With our resilient balance sheet and strong franchise, we remain focused on delivering sustainable growth and improving long-term financial performance and returns for shareholders. Our strategic pillars continue to define our business model and provide a clear direction for us. We are well positioned for the second half of 2016 and confident in our ability to benefit from future growth opportunities in the UAE.

We are also pleased to announce that global ratings agency Standard & Poor's affirmed its rating on ADCB today at A/A-1 with a stable outlook, and the Bank's stand-alone credit profile (SACP) was upgraded to 'bbb+' from 'bbb', driven by the Bank's strengthening business position, track record of improving returns and balanced earnings across different business segments, a testament to the work we have been doing as a team over the years."

Ala'a Eraiqat, Member of the Board and Chief Executive Officer, commented on the results:

"We are pleased with our financial results for the first half of the year. The Bank delivered a net profit of AED 2.147 billion and a return on equity of 17% for the first half of 2016. On a quarterly basis, the Bank reported a net profit of AED 1.126 billion for the second quarter of 2016, an increase of 10% over the previous quarter. Each of our businesses performed well, with consistent underlying growth. We delivered this growth despite the weaker operating environment, and ended first half 2016 with improved asset quality metrics, including a non-performing loan ratio of 2.7% and a provision coverage ratio of 133%.

We remain prudent in our growth strategy and continue to focus on maintaining a diversified funding base while liquidity remains a top priority. Year-to- date we have made good progress in a number of areas. In a very competitive environment, we increased our low cost CASA deposits by 5%, grew our investment book by 18%, and as at 30 June 2016, we continued to be a net lender of over AED 20 billion in the interbank markets.

Our relentless focus on diversifying our revenues resulted in higher non-interest income contribution for the first half of the year, primarily driven by higher fees and commission income and higher trading income.

Our ongoing bank-wide cost management initiatives helped us to maintain a cost to income ratio within our target range for the first half of 2016, while our cost to income ratio for Q2'16 improved to 31.1% from 34.9% in Q1'16. This improvement was achieved while we continued to invest in our businesses for the future, dedicating resources to technology, systems and controls.

Our quarterly financial performance is a reflection of our well executed strategic pillars agreed over the past years and demonstrates the strength of our franchise and businesses. Customer centricity and delivering long term value for shareholders remain the cornerstone of our strategy."



-Ends-

About ADCB (30 June 2016):
ADCB was formed in 1985 and as at 30 June 2016 employed over 4,500 people from 73 nationalities, serving retail customers and corporate clients in 48 branches, 3 pay offices and 2 branches in India, 1 branch in Jersey and representative offices in London and Singapore. As at 30 June 2016, ADCB's total assets were AED 241 billion.

ADCB is a full-service commercial bank which offers a wide range of products and services such as retail banking, wealth management, private banking, corporate banking, commercial banking, cash management, investment banking, corporate finance, foreign exchange, interest rate and currency derivatives and Islamic products, project finance and property management services.

ADCB is owned 58.08% by the Government of Abu Dhabi (Abu Dhabi Investment Council). Its shares are traded on the Abu Dhabi Securities Exchange. As at 30 June 2016, excluding treasury shares, ADCB's market capitalisation was AED 31 billion.

For further details please contact:
Investor Relations                                                               
Denise Caouki                                                                      
E: adcb_investor_relations@adcb.com
Corporate Communications                                                                                                              
Majdi Abd El Muhdi                                                                                                            
E: majdi.a@adcb.com

This document has been prepared by Abu Dhabi Commercial Bank PJSC ("ADCB") for information purposes only. The information, statements and opinions contained in this presentation do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. This document is not intended for distribution in any jurisdiction in which such distribution would be contrary to local law or reputation.

The material contained in this press release is intended to be general background information on ADCB and its activities and does not purport to be complete. It may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. It is not intended that this document be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending on their specific investment objectives, financial situation or particular needs.

This document may contain certain forward-looking statements with respect to certain of ADCB's plans and its current goals and expectations relating to future financial conditions, performance and results. These statements relate to ADCB's current view with respect to future events and are subject to change, certain risks, uncertainties and assumptions which are, in many instances, beyond ADCB's control and have been made based upon management's expectations and beliefs concerning future developments and their potential effect upon ADCB.

By their nature, these forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond ADCB's control, including, among others, the UAE domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory and Governmental authorities, the impact of competition, the timing impact and other uncertainties of future acquisition or combinations within relevant industries.

As a result, ADCB's actual future condition, performance and results may differ materially from the plans, goals and expectations set out in ADCB's forward-looking statements and persons reading this document should not place reliance on forward-looking statements. Such forward-looking statements are made only as at the date on which such statements are made and ADCB does not undertake to update forward-looking statements contained in this document or any other forward-looking statement it may make.


[1] During the period, loans and advances to banks have been reclassified to "Deposits and balances due from banks, net" to better reflect the underlying nature of the business of the borrowers. Accordingly, comparative amounts pertaining to previous years were reclassified to conform to current period's presentation.

© Press Release 2016