• Strong performance in H1 2023 driven by solid revenue growth

Abu Dhabi Islamic Bank reported a growth in Net Profit of 61% for the first half of 2023 to AED 2.3 billion from AED 1.4 billion in H1 2022, reflecting a consistent trend of strong growth. Net profit for Q2 2023 reached AED 1.2 billion with 68% growth versus Q2 2022.

Revenue for H1 2023 improved by 50% to AED 4.3 billion compared to AED 2.8 billion last year due to excellent income diversification mix and strong growth across all business segments and products. Funded income grew by 75% to AED 2.9 billion vs AED 1.7 billion in the corresponding period of last year, driven by higher volumes and better margins. Non-funded income grew by 14% to reach AED 1.3 billion in H1 2023 versus AED 1.2 billion in the corresponding period of last year driven by 15% growth in fees and commissions.

Cost to income ratio was managed down with an improvement of 7.0 percentage points to 33.9% versus 40.9% in the corresponding period. This was predominantly driven by growth in Income and enhanced productivity.

Impairments grew 62% to AED 369 million for the first half of 2023. The provision coverage of non-performing financing (including collaterals) improved by 4.7 percentage points to 128.4%.

Total assets increased 28% to reach AED 182 billion, driven by 18% growth in gross financing and 22% growth in investments.

Customer deposits rose 31% to reach AED 150 billion versus AED 115 billion in H1 2022 driven mainly by 14% growth in Current and Savings Accounts (CASA) despite the high-rate environment with CASA now comprising 66% of total deposits.

ADIB maintained a robust capital position with a Common Equity Tier 1 ratio of 12.82% and a total Capital Adequacy Ratio of 17.65%. The bank’s liquidity position was healthy and comfortably within regulatory requirements, with the advances to stable funding ratio at 78.0% and the eligible liquid asset ratio at 21.8%.

GROUP FINANCIAL REVIEW

Group net profit grew 61% in H1 2023 to AED 2.3 billion compared to AED 1.4 billion in H1 2022. This was driven mainly by solid growth in revenues compared to the corresponding period of the previous year.

Revenues increased by 50% in H1 2023 to AED 4.3 billion versus AED 2.8 billion in H1 2022, primarily driven by growth in funded income mainly due to the impact of higher rates and strong finance growth.

Funded income rose 75% to reach AED 2.9 billion supported by higher volumes and rising rates with 25% growth in average earning assets thereby increasing the net profit margin to 4.41% as compared to 3.13% in H1 2022, despite an increase in the cost of funding. ADIB preserves one of the highest margins in the market, supported by one of the lowest cost of funds in the market.

Non-funded income increased by 14% to AED 1.3 billion for H1 2023 driven by a 15% increase in fees and commissions income. Non-funded income represents 31% of total income.

Fees and commissions income was up 15% year-on-year driven by card related fees and income from trade finance.

Overall revenues were supported by growth in new customers of approximately 96,000 during the first half of 2023, evidencing ADIB’s long-term commitment to its customers and continuous efforts to deliver superior customer service.

Strategic and transformation investments and volume-related expenses resulted in the increase of 25% in operating expenses to AED 1.4 billion versus H1 2022 that was partially offset by the benefit of productivity savings. Despite this, there was an overall improvement in the cost-to-income ratio of 7.0 percentage points to 33.9%.

The net impairment charge for the first half of the year increased by 62% to AED 369 million. The cost of risk saw a slight increase of 6 basis points to 0.48%. The provision coverage of non-performing financing (including collaterals) improved by 4.7 percentage points to 128.4%.

Balance Sheet

Total assets reached AED 182.2 billion as of 30 June 2023, an increase of 28% from 30 June 2022, driven mainly by a growth in net financing, growth in cash and balances with central bank, and growth of the investment’s portfolio.

Gross customer financing increased 18% to AED 115.1 billion from 14% growth in wholesale financing across government and public sector enterprises, corporates, and financial institutions while retail financing portfolios grew by 10%.

The bank’s investment portfolio increased 22% on 30 June 2023 to AED 22.6 billion.

Customer deposits amounted to AED 150 billion as of 30 June 2023, up 31% from 30 June 2022 as CASA deposits increased by 14% to AED 99 billion comprising 66% of total customer deposits.

Non-performing financing totaled AED 8.6 billion as of 30 June 2023 compared to AED 8.2 billion as of 30 June 2022.

Non-performing financing ratio improved to 7.5% versus 8.4% as of 30 June 2022.

ADIB continued to maintain a healthy liquidity position with an advance to stable funding ratio at 78.0% compared with 85.1% on 30 June 2022, while the eligible liquid asset ratio was 21.8% as of 30 June 2023 versus 17.4% at 30 June 2022.

The bank further maintained a robust capital position with the Common Equity Tier 1 ratio at 12.82%, a tier 1 ratio of 16.53% and capital adequacy ratio of 17.65% as of 30 June 2023, exceeding regulatory requirements prescribed by the UAE Central Bank.

Retail Banking Group

ADIB’s Retail Banking Group (‘Retail Banking’), is the leading bank for UAE nationals and a critical growth engine for ADIB. Retail Banking delivered a strong performance, generating AED 1.3 billion of net profit in H1 2023, an 95% increase over the corresponding period last year.

In addition, Retail Banking continued strengthening their customer propositions and improving channel productivity, resulting in improved sales momentum for cards and 10% growth in gross financing to AED 56.5 billion as of 30 June 2023.

Based on encouraging financing growth, revenue for Retail Banking increased 46% to AED 2.4 billion, on the back of growth in funded income.

Operating expenses in H1 2023 agrew slightly, reflecting the inflationary trend, while the Bank undertook cost optimisation initiatives, and continued focus on process simplification and automation to improve efficiency and deliver better customer experiences.

The strategic focus on delivering excellent customer experience enabled Retail Banking to expand its customer base by approximately 96,000 customers in the first half of 2023.

Deposits also grew by 12%. This is a testament to the Bank’s strong UAE national and Emirati-focused strategy, which is at the core of the Retail Banking business. This was driven by CASA growth of 14%.

On digital, the Bank continued to introduce industry-leading digital capabilities, redesign the client experience, and enabled customers to bank anytime, anywhere, on their preferred channels. The provision of the new digital remote sales platform allowed customers to interact remotely, driving significant sales across consumer finance products.

Wholesale Banking Group

The Wholesale Banking Group (‘WBG’) saw an increase in net profit of 28% driven by higher volume and the benefit of rising rates.

Total operating income grew 27% reflecting an economic rebound and improvements in funded income.

Gross customer financing grew by 14% to AED 44.1 billion, as a result of a rebound in economic activity and market sentiment, as well as strong momentum in deal execution. This was driven by demand from existing large corporates as well as new to bank clients.

The Global Transaction Banking (GTB) team continued to make progress on its transformation journey, offering digitally enabled and innovative solutions to clients.

WBG’s impairment charge for the first half of the year amounted to AED 137 million, a 73% increase relative to the first half of 2022.

ADIB’s Treasury department saw a decline of 63% in net profit to AED 102 million during the first half of 2023 due to a reduction in the revenue for the period by 41% to AED 181 million. This was primarily due to adverse market conditions, partially offset by fee income generation from customers’ activities.

Strategy and Outlook

Strategy

ADIB Strategy defined the bank’s renewed purpose of becoming a lifelong partner for our clients, community, and colleagues. Furthermore, ADIB’s vision was revamped to be the world’s most innovative Islamic bank.

The bank has delivered the below strategic initiatives under the 4 strategic pillars:

Continuous Innovation

ADIB launched various products that enabled a growth in market share: 

  • Istiqrar: ADIB launched UAE’s first long-term, fixed-rate home finance. This unique product offers customers
    a consistent, fixed monthly instalment throughout the chosen tenor rate, eliminating any variations or fluctuations.
  • Cashback Card: ADIB launched its new Cashback Visa Covered Card signifying an expanded role for cards in the bank’s retail strategy. The new card is considered one of the industry’s best cashback cards and offers customers the opportunity to earn 4% cash rewards when they use the card across a wide range of daily spending categories.
  • Yusr Salary Advance: Allows customers to avail their pay cheque in advance instantly with a Murabaha structure-based fee. The new feature can be accessed through the mobile banking app and branches across the UAE. ‘Yusr’ is designed to help existing ADIB salary transfer customers, both UAE Nationals and expatriates, to manage their financials and fulfil their short-term funding needs. This product aims to provide convenience and assist customers to access up to 50% of their salaries.
  • SME Instant Account Opening: ADIB became the first bank in the UAE to provide small and medium-sized enterprises (SMEs) with convenient remote account opening services through a mobile app by deploying Emirates Face Recognition (EFR) technology. This new feature allows businesses to apply for a business account without the need to visit a branch or submit physical documents or signatures. Through this technology, ADIB can perform highly secure identity verification before opening a new account for businesses in less than 24 business hours. 
  • 50% cashback: ADIB launched a unique campaign that rewards customers for consolidating their banking with ADIB. The first-of-its-kind campaign rewards customers with a one-time bonus of 50% of their monthly salary when they transfer their finance (personal or home finance) and salary to ADIB and obtain one of the ADIB Covered Cards, such as Emirates Skywards, Etihad Guest, Etisalat Gold, Platinum & Signature, or Cashback cards.

Segment Focused

ADIB continued to build on its existing strength in the Emirati retail segment while attracting and developing new business segments where the bank can grow profitably. In this respect, ADIB launched propositions that support Emirati customers across all financial stages in their lives and welcomed 96,000 customers.

Digital Excellence

Digital remains at the heart of ADIB’s 2025 strategy, and the bank strives to become a digital-first financial institution. The number of digitally active customers has increased steadily over the past year. Currently 76% customers are digitally active.

Key highlights of ADIB’s progress on digitalization and innovation include the following:

  • ADIB’s mobile app is top ranked on the UAE App store.
  • 54 % of Personal Finance customers are on-boarded digitally.
  • New features were added to the Mobile app to help increase customer usage and adoption – these include IPO subscription, push notification, Consumer Protection Rights, and additional security features for transfers.

Sustainable Future

  • ADIB released its second ESG report emphasising the progress made on the bank’s Environmental, Social, and Governance (ESG) goals and commitments for the year 2023. The report also highlights a new three-year ESG strategy to integrate ESG risks considerations into the banking framework and support the UAE’s efforts to achieve the transition towards a more sustainable economy.
  • ADIB is a regional sustainability leader (MSCI ESG rating of ‘A’), and a constituent of MSCI ESG Leaders index.
  • ADIB finalized its sustainability and ESG frameworks.
  • ADIB continued to play a crucial role in helping to deliver the region’s sustainable finance agenda facilitating around USD1.7 billion worth of sustainable projects.
  • ADIB has achieved an upgrade to its environmental, social, and governance (ESG) risk score by Sustainalytics, one of the world's leading ESG rating agencies. ADIB's overall Sustainalytics ESG risk score has improved from 34.25 in 2022 to 29.6 in 2023, reflecting a significant leap that transitioned ADIB from the 'high risk' category to the 'medium risk' category. This achievement underscores the bank’s strong commitment to ESG principles and its ongoing efforts to effectively manage risks. The ratings are measured on a scale from 0 to 100, with lower scores indicating a reduction in risk.
  • ADIB leads the way in Emiratisation by significantly investing in upskilling, reskilling, and developing Emiratis through international training and development programs.

Outlook

The outlook for the GCC remains positive despite ongoing concerns over a global economic slowdown. Higher oil prices have pushed GCC budgets into surplus with expectation for the UAE GDP to grow by 3.5% in 2023. Liquidity in the UAE remains strong, with higher oil prices expected in the rest of 2023 which will help in deposit inflows.

-Ends-

About ADIB

ADIB is a leading bank in the UAE with more than AED 182 billion in assets. The bank also offers world-class online, mobile and phone banking services, providing clients with seamless digital access to their accounts 24 hours a day.

ADIB provides Retail, Corporate, Business, Private Banking and Wealth Management Solutions. The bank was established in 1997 and its shares are traded on the Abu Dhabi Securities Exchange (ADX).

ADIB has a strong presence in six strategic markets: Egypt, where it has 70 branches, the Kingdom of Saudi Arabia, the United Kingdom, Sudan, Qatar and Iraq.

Named World’s Best Islamic Bank by The Financial Times - The Banker publication, ADIB has a rich track record of innovation, including introducing the award-winning Ghina savings account, award-winning co-branded cards with Emirates airlines, Etihad and Etisalat and a wide range of financing products.