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Abu Dhabi Commercial Bank reported on Tuesday 13 per cent jump in net profit to Dh 4.840 billion ($1.32bln) for 2018 underpinned by "record operating income, optimal management of cost of funds and lower impairment charges."
The bank's Board of Directors has recommended a cash dividend of Dh0.46 per share, translating to a pay out of Dh2.391 billion, equivalent to 49 per cent of net profit.
Eissa Mohamed Al Suwaidi, Chairman, said the bank achieved the result by adhering to its successful strategy that continues to yield solid results. "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."
He said the bank is now on the cusp of another significant moment in its history, as it prepares 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," said Al Suwaidi.
He said the bank remains committed to contributing to the development of the UAE banking sector and the country.Ala'a Eraiqat, Member of the Board and Group Chief Executive Officer said ADCB has once again demonstrated the strength and the resilience required to deliver a strong return for our shareholders.
"We saw our full year net profit rise by 13 per cent, while our quarterly net profit surged 27 per cent over the prior year to a record high. The return on average equity increased to 16.3 per cent from 15 per cent in 2017, delivering stronger shareholder value," said Eraiqat.
The bank said the record operating income for the year was supported by high net interest margins, while 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 Current Account Savings Account 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 per cent compared to 100.1 per cent last year," said the bank.
Wholesale banking loans grew six per cent driven by corporate lending, while ongoing drive to de-risk the unsecured retail loan portfolio resulted in consumer banking loans to decrease by four per cent year on year. This has resulted in a much-improved cost of risk for the bank at 0.57 per cent compared to 0.81 per cent in 2017.
The bank remains well-capitalised, with a Basel III capital adequacy ratio (CAR) of 17.26 per cent. "Our liquidity remains strong, with a liquidity coverage ratio of 186 per cent, compared to the minimum of 90 per cent prescribed by the UAE Central Bank," said the bank. -issacjohn@khaleejtimes.com
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