ADIBs first quarter net profit surges 19.8%

Monday, Apr 24, 2017

Dubai: The Abu Dhabi Islamic Bank (ADIB) Group’s net profit increased 19.8 per cent to Dh577.5 million in the first quarter of 2017 compared to Dh482 million in the same quarter last year and profits were up 26.9 per cent from end of fourth quarter of 2016.

Group net revenues for the first quarter increased by 4.3 per cent to Dh1.37 billion compared to Dh1.31 billion in the first quarter of last year.

“ADIB has achieved improved profitability whilst further enhancing its asset quality and capital ratios. The bank has remained focused on prudently managing risk and credit extension with customer financing assets reaching Dh77.3 billion, resulting in the customer financing assets to deposits ratio further improving to 76.6 per cent,” said Khamis Mohammad Buharoon, ADIB’s Vice Chairman and Acting CEO.

Based on its conservative approach on credit extension and capital management, the bank reported a year-on-year decrease of 1.2 per cent in customer financing assets. At the same time, customer deposits increased by 5.2 per cent year-on-year to Dh101 billion at the close of the first quarter of 2017. The bank reported a strong liquidity position with advances to deposits ratio of 76.6 per cent.

Credit provisions and impairments for the quarter decreased by 24 per cent to Dh164.4 million year on year. At the close of the first quarter this year, non-performing assets ratio stood at 4.9 per cent with non-performing assets totalling Dh3.95 billion. The bank took an additional Dh152.6 million in provisions in the first quarter. Total credit provisions, net of write-offs, stand at Dh3 billion.

“The continued improvement in resolving our non-performing asset portfolio and the stabilisation of the business environment coupled with our focus in asset quality has led to higher recoveries and lower impairment allowances,” said Buharoon.

Despite the ongoing high levels of investments, the group’s cost-to-income ratio for the first quarter of 2017 declined to 45.7 per cent from 46.7 per cent at the end for the first quarter of last year.The bank maintained strong capital adequacy ratio (Basel II) of 15.85 with Tier 1 capital ratio at 15.23 per cent and a common equity tier 1 ratio of 9.71 per cent.

“ADIB is confident about meeting the Basel III capital and liquidity requirements as they are introduced by the Central Bank of the UAE. ADIB’s strategy has been to balance long-term growth with capital conservation. As evidence of this, ADIB increased total equity by 3.2 per cent year-on-year to Dh16 billion,” said Buharoon.

ADIB continued to invest in digital initiatives to improve customer convenience and experience. The bank recently launched ADIB Express, a digitally-enabled branch that combines the benefits of digital banking with a bespoke personalised service.

Looking ahead, although many challenges within the UAE economy have been addressed, particularly within the SME sector, the bank expects to see an increase in provisions in the retail sector as businesses continue to adapt to structural changes in the regional economy.

By Babu Das Augustine Banking Editor