(2018 vs. 2017)
‒ Net profit of AED 4.840 billion was up 13%
‒ Total net interest income and Islamic financing income of AED 7.219 billion was up 8%
‒ Operating income of AED 9.181 billion was up 3%
‒ Cost to income ratio of 33.6% compared to 33.1% in 2017
‒ Operating profit before impairment allowances of AED 6.098 billion was up 3%
‒ Impairment allowances (net) of AED 1.266 billion was 24% lower
‒ Non-interest income of AED 1.962 billion was 11% lower
‒ Net interest margin of 3.04% compared to 2.91% in 2017
‒ Return on average equity of 16.3% compared to 15.0% in 2017
Resilient balance sheet, significantly improved loan to deposit ratio
– Total assets grew 6% to AED 280 billion and net loans to customers increased 2% to AED 166 billion
– Deposits from customers increased 8% to AED 177 billion, low cost CASA deposits comprised 39.4% of total customer deposits
– Loan to deposit ratio improved to 94.2% from 100.1% in 2017
Comfortable capital and liquidity position
– Capital adequacy ratio (Basel III) of 17.26% and common equity tier 1 (CET1) ratio of 13.40% compared to minimum capital requirements of 12.75% and 9.25% (including buffers) respectively prescribed by the UAE Central Bank
– Liquidity coverage ratio (LCR) of 186% compared to a minimum ratio of 90% prescribed by the UAE Central Bank
– Maintaining a strong liquidity ratio of 28.3% compared to 24.5% in 2017
Healthy asset quality indicators, continued improvement in cost of risk
– NPL ratio of 2.9% compared to 2.1% as at 31 December 2017
– Provision coverage ratio of 130.2% compared to 162.9% as at 31 December 2017
– Cost of risk of 0.57% compared to 0.81% in 2017
– Collective impairment allowances were 2.32% of credit risk weighted assets, above the minimum 1.5% stipulated by the UAE Central Bank
As a result of the Bank’s strong performance in 2018, the Board of Directors has recommended a cash dividend of AED 0.46 per share, translating to a pay out of AED 2.391 billion, equivalent to 49% of net profit.
Commenting on the results, Eissa Mohamed Al Suwaidi, Chairman said:
“I am pleased to report a strong performance for the Bank in 2018. We have achieved this by adhering to our successful strategy that continues to yield solid results. Our long-term strategy remains consistent, clear and focused. As the introduction of a digital pillar last year shows, we regularly assess and review our strategic approach. Our five core pillars have served to build a resilient and innovative organisation with exceptional customer service and a strong brand.
In 2018, despite continued headwinds, our net profit improved significantly year on year, our operating income rose to a record high, while all other significant metrics remained healthy. As we continue to grow, we transform the Bank to provide customers with greater choice of products and services and an outstanding banking experience. At the same time, our shareholders continue to benefit from the creation of long-term, sustainable value.
We are now on the cusp of another significant moment in our history, as we prepare to merge with Union National Bank and together acquire Al Hilal Bank. This will create a more resilient, powerful financial services group, which will help to support our economy. This merger will be subject to the approval of shareholders and regulators.
As the new bank takes shape, it will also be vital for the new Board to oversee a disciplined approach to all aspects of the integration process. Capturing synergies and ensuring a smooth transition for customers will be critical components to create a robust new business in the coming months and years.
While we expect much to change in the next year, the culture and values that have delivered ADCB to this point will not change.
The Bank remains committed to contributing to the development of the UAE banking sector and the country, and on behalf of the Board, I thank His Highness Sheikh Khalifa Bin Zayed Al Nahyan, the UAE President and Ruler of Abu Dhabi, His Highness Sheikh Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, His Highness Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, and the UAE Central Bank for their continued support for ADCB and the future development of the UAE economy. I also extend my gratitude and appreciation of the Board to our shareholders, our valued customers, and the ADCB executive management team and employees for their continued dedication and commitment.”
Commenting on the Bank’s performance, Ala’a Eraiqat, Member of the Board and Group Chief Executive Officer said:
Creating sustainable value
"Driven by ambition and guided by discipline, ADCB has once again demonstrated the strength and the resilience required to deliver a strong return for our shareholders. I am pleased to report a strong set of results, with top and bottom line growth. Against the economic backdrop, we saw our full year net profit rise by 13%, while our quarterly net profit surged 27% over the prior year to a record high. The return on average equity increased to 16.3% from 15.0% in 2017, delivering stronger shareholder value.
Record operating income for the year was supported by high net interest margins, whist non-interest income was impacted by lower volumes and higher fee and commission related expenses. This was partially offset by a strong increase in trading income, a healthy pick up in card related fees, income from the merchant acquiring business and income from trade finance commission.
Our balance sheet remains strong and healthy. At a time of rising benchmark rates, the Bank did not see any significant adverse impact on CASA deposits, which contracted only marginally and time deposits further increased to meet the LCR and the NSFR regulations. Loan to deposit ratio significantly improved to 94.2% compared to 100.1% last year.
We continue to grow loans on a diversified basis across all sectors. Wholesale Banking loans grew 6% driven by corporate lending, while our ongoing drive to de-risk the unsecured retail loan portfolio resulted in Consumer Banking loans to decreasing by 4% year on year. This has resulted in a much improved cost of risk for the Bank at 0.57% compared to 0.81% in 2017.
We remain well-capitalised, with a CET1 ratio of 13.40% and a Basel III capital adequacy ratio (CAR) of 17.26%. The decrease in our CAR was primarily as a result of last year’s dividend pay-out, IFRS9 adjustments, an increase in credit risk weighted assets and part repayment of Tier 2 capital. Our liquidity remains strong, with a liquidity coverage ratio of 186%, compared to the minimum of 90% prescribed by the UAE Central Bank.
These results reflect the quality, stability and efficiency of our business model, which has successfully balanced our earnings generation across all business segments. Together with our vigilant approach to risk and our adherence to a world-class governance framework, ADCB remains well-protected against any economic headwinds.
In line with our clear and compelling strategy around digital development, we have embarked on a transformation programme across the Bank to help us expand and improve our services. In 2018, we further refined our digital platforms and launched a number of new apps to make banking more convenient for our customers.
Our strategic investments in operational excellence and digital transformation have given greater flexibility to our customers, while securing long-term benefits for the Bank. These accomplishments were achieved through an increase of only 5% in our operating expenses, whilst our cost to income ratio of 33.6% remained comfortable within our target range.
Looking forward – Beyond ambition
We go forward into 2019 with great confidence. Our merger with Union National Bank, and the combined bank's acquisition of Al Hilal Bank, represents a new dawn for ADCB. It brings with it new possibilities and exciting opportunities that we are well-placed to capitalize on. Our deep expertise, positive culture and robust governance will serve us well as we move beyond our ambition to truly transform the banking sector across the UAE. They will enable us to deepen our engagement with our employees, better connect with our customers, create even more value for our shareholders, give more support for communities, and deliver an extremely powerful contribution to the next stage in the development of the UAE economy.”
Awards – 2018
About ADCB (31 December 2018):
ADCB was formed in 1985 and as at 31 December 2018 employed over 5,000 people from 84 nationalities, serving retail customers and corporate clients in 49 branches, in addition to the 2 SimplyLife Sales & Service Centers and 4 uBank Centers in the UAE, 2 branches in India, 1 branch in Jersey and representative offices in London and Singapore. As at 31 December 2018, ADCB’s total assets were AED 280 billion.
ADCB is a full-service commercial bank which offers a wide range of products and services in both conventional and Shari’ah compliant banking, operating in four business segments including Consumer Banking, Wholesale Banking, Treasury and Investments and Property Management.
ADCB is owned 62.52% by the Government of Abu Dhabi (Abu Dhabi Investment Council). Its shares are traded on the Abu Dhabi Securities Exchange. As at 31 December 2018, ADCB’s market capitalisation was AED 42 billion.
For further details please contact:
Majdi Abd El Muhdi
© Press Release 2019