Abu Dhabi – Abu Dhabi Commercial Bank PJSC (“ADCB” or the “Bank”) today reported its financial results for the nine month period ended 30 September 2016 (“9M’16”).
Key highlights (30 September 2016)
Operating performance: Consistent and resilient financial performance with strong fundamentals
9M’16 vs. 9M’15
– Operating profit before impairment allowances of AED 4.257 billion was up 3%; operating expenses of AED 2.067 billion declined 2%, due to the bank’s disciplined cost management strategy
– While net profit of AED 3.153 billion was 16% lower impacted by higher impairment allowances, the Bank maintained an industry leading ROAE of 16% and ROAA of 1.66% for the nine month period of 2016
– Operating income of AED 6.324 billion was up 1%, while total net interest income of AED 4.628 billion was 2% lower year on year, impacted by higher funding costs. This was partially offset by higher non-interest income of AED 1.697 billion, up 12% over 9M’15, which comprised 27% of operating income compared to 24% in 9M’15, driven by the Bank’s continued focus on diversifying revenues
– Interest income (gross) of AED 6.423 billion was up 10%, while income from Islamic financing (gross) of AED 609 million recorded a strong growth of 23% year on year
– Net fee income of AED 1.092 billion was up 4%, mainly attributable to a healthy increase in retail banking fees (net) at AED 523 million, up 15% year on year
Disciplined cost management, improved cost to income ratio
– Cost to income ratio for 9M’16 was 32.7% compared to 33.8% in 9M’15, an improvement of 110 bps year on year
– Cost of funds for 9M’16 was 127 bps compared to 87 bps in 9M’15, in line with higher benchmark rates and reflective of the tighter liquidity environment
Healthy asset quality metrics
– As at 30 September 2016, NPL and provision coverage ratios were 2.6% and 133.1% respectively, compared to NPL ratio of 3.0% and provision coverage ratio of 128.5% as at 31 December 2015
– Collective impairment allowances were 1.81% of credit risk weighted assets, well above the minimum 1.5% stipulated by the UAE Central Bank
Resilient balance sheet; healthy loan and deposit growth
– Total assets grew 12% to AED 255 billion and net loans and advances to customers increased 10% to AED 162 billion over 31 December 2015
– Deposits from customers increased 7% to AED 153 billion over 31 December 2015. Low cost current and savings account (CASA) deposits comprised 42.2% of total customer deposits
Strong capital ratios and high liquidity levels maintained
– As at 30 September 2016, capital adequacy ratio was 17.98% and tier I ratio was 14.72%
– Net lender of AED 23 billion in the interbank markets as at 30 September 2016, with a strong liquidity ratio of 26.4%
– Investment securities increased to AED 26 billion as at 30 September 2016, an increase of 23% over year end, mainly driven by an increase in UAE government bonds
Ala’a Eraiqat, Member of the Board and Group Chief Executive Officer, commented on the results:
“The Bank delivered strong financial results for the nine month period of 2016, reporting a net profit AED 3.153 billion and an industry leading return on equity of 16%. While the challenging operating environment and the turbulent markets have impacted the industry, our underlying performance and fundamentals remain strong and we continue to grow our businesses. Our balance sheet remains resilient and registered a healthy growth in net loans and customer deposits year to date, 10% and 7% respectively.
We continuously work to build loyalty and earn trust. Our consistent good set of results and profitable growth in a range of economic scenarios is a reflection of the trust that our clients place on us. In September 2016, ADCB was ranked amongst the top 5 safest banks in the Middle East and Africa by Global Finance, in addition to numerous prestigious awards won during this quarter, including “Best Cash Manager” by Euromoney for our world-class cash management services.
We have confidence in the long-term growth of the UAE economy. UAE is well positioned and poised for sustained growth in the future. We have a strong franchise and continue to deliver enduring value for all our stakeholders.”
Deepak Khullar, Group Chief Financial Officer, commented on the results:
“We are pleased with our performance this quarter and achieved solid results year to date, continuing to manage our business efficiently. Our operating performance demonstrates the strength and resilience of our business model and strategic pillars. Operating profit before impairment allowances for the third quarter was up 11% over Q3’15, and for the nine month period was up 3% over 9M’15. Cost to income ratio for the nine month period of 2016 improved to 32.7% from 33.8% during the same period last year. Our bottom line was impacted by higher impairment allowances reflecting the current market conditions, while our asset quality metrics remain healthy with a non performing loan ratio of 2.6% and provision coverage ratio of 133.1% as at 30 September 2016.
Our balance sheet remains strong with continuous focus on granular loan growth. Year to date, Wholesale Banking loans (gross) were up 5% and Consumer Banking loans (gross) were up 9%. Our capital ratios remain robust and our low cost CASA deposits comprised 42% of our total customer deposits as at 30 September 2016. Operating in a tighter liquidity environment, the Bank also increased its time deposits significantly, which resulted in higher cost of funds year on year.
We remain committed in our pursuit of measured and sustainable growth and our strategic framework creates a clear direction and agility in a rapidly changing world.”
About ADCB (30 September 2016):
ADCB was formed in 1985 and as at 30 September 2016 employed over 4,500 people from 74 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 September 2016, ADCB’s total assets were AED 255 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 September 2016, excluding treasury shares, ADCB’s market capitalisation was AED 34 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
© Press Release 2016
