Abu Dhabi Commercial Bank reports first half 2018 net profit

Abu Dhabi: – Abu Dhabi Commercial Bank PJSC (“ADCB” or the “Bank”) today reported its half year financial results for the period ended 30 June 2018 (“H1’18”). 

Key highlights (30 June 2018) 

• Strong bottom and top line growth in an evolving operating and regulatory environment

Half year comparison (H1’18 vs. H1’17)

• Net profit of AED 2.332 billion was up 10%
• Total net interest income and Islamic financing income of AED 3.612 billion was up 9%
• Operating income of AED 4.643 billion was up 7%
• Operating profit before impairment allowances of AED 3.097 billion was up 6%
• Impairment allowances (net) of AED 770 million was 5% lower
• Non-interest income of AED 1.030 billion was at par
• Net interest margin of 3.11% compared to 2.88% in H1’17

• Well managed cost base and healthy asset quality indicators

• Cost to income ratio for H1’18 was 33.3% compared to 32.5% in H1’17, remaining within our target range
• Cost of funds for H1’18 was 1.74% compared to 1.46%  in H1’17, in line with the rising benchmark rates
• Cost of risk for H1’18 improved to 0.68% from 0.81% in H1’17
• As at 30 June 2018, NPL and provision coverage ratios were 2.7% and 145.9% respectively, compared to 2.1% and 162.9% as at 31 December 2017

• Delivering sustainable growth, reliance on customer deposits for funding

• Net loans and advances increased 2% to 166 billion over 31 December 2017
• Deposits from customers increased 5% to AED 172 billion over 31 December 2017
• Low cost CASA (Current and savings account) deposits increased 5% to AED 75 billion over 31 December 2017 and comprised 43.4 % of total customer deposits
• Loan to deposit ratio of 96.6% compared to 100.1% as at 31 December 2017

• Strong capital position and comfortable liquidity levels

• Capital adequacy ratio (Basel III) of 16.66% and common equity tier 1 (CET1) ratio of 12.37% remained above the UAE Central Bank minimum capital requirements of 12.75% and 9.25% (including buffers)
• Liquidity coverage ratio (LCR) of 132% compared to a minimum ratio of 90% prescribed by UAE Central Bank
• Maintaining a strong liquidity ratio of 26.2%
• Net lender of AED 11 billion in the interbank markets 

Commenting on the results, Eissa Mohamed Al Suwaidi, Chairman said: 

“Our financial performance in the first half of 2018 reflects the Bank’s continued growth and resilience year over year. We continued to post solid results in a testing environment.

The strengthening regulatory environment has resulted in an enhanced supervisory framework and improved financial stability in the UAE. In 2018, the Bank successfully transitioned to the IFRS9 accounting standard, following the smooth transition to Basel III at the end of 2017. The Bank is well positioned to comply with evolving regulatory requirements, and maintains a comfortable liquidity position and healthy capital ratios, which remain well above the minimum requirements of the Central Bank. Our risk management discipline and UAE-centric strategy continue to serve us well.

We remain committed to support the development of the UAE Banking Sector and continue to deliver long-term value for our customers and shareholders.” 

Ala’a Eraiqat, Member of the Board and Chief Executive Officer, commented on the results:

“The Bank reported a strong set of results for the first half of 2018, delivering double digit growth in net profit with a return on equity of 16.5%.  First half 2018 net profit of AED 2.332 billion represented an increase of 10% year on year and second quarter net profit of AED 1.125 billion represented an increase of 12% over the corresponding period in 2017.

Good progress was made on a significant number of fronts. Consistent with our objective of delivering sustainable growth, customer deposits increased 5.2% year to date, outpacing system wide growth of 2.7%*. Loan to deposit ratio improved to 96.6% from 100.1% as at 31 December 2017. CASA deposits increased 5% over 31 December 2017. In a rising rate environment, cost of funds increased less than the benchmark rates, whilst asset yields continued to improve. Gross fee income for the first half of 2018 was up 2% year on year. Our asset quality indicators remain healthy with a cost of risk of 0.68%, at its lowest levels since 2016.

We continue to invest in our businesses and focus on our commitment to build digital technologies to deliver a better customer experience, whilst effectively managing our cost base and optimising our balance sheet.”

*UAE Central Bank data available only until May 2018 

-Ends-

About ADCB (30 June 2018):

ADCB was formed in 1985 and as at 30 June 2018 employed over 5,000 people from 80 nationalities, serving retail customers and corporate clients in 50 branches, in addition to the 2 SimplyLife Sales & Service Centers and 3 uBank Centers in the UAE, 2 branches in India, 1 branch in Jersey and representative offices in London and Singapore. As at 30 June 2018, ADCB’s total assets were AED 272 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 30 June 2018, ADCB’s market capitalisation was AED 37 billion.

For further details please contact:  

Investor Relations                                                               

Denise Caouki                                                                      

E: adcbir@adcb.com  

Corporate Communications                                                                                                              

Majdi Abd El Muhdi                                                                                                            

E: majdi.a@adcb.com   

This document has been prepared by Abu Dhabi Commercial Bank PJSC (“ADCB”) for information purposes only. The information, statements and opinions contained in this presentation do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. This document is not intended for distribution in any jurisdiction in which such distribution would be contrary to local law or reputation.

The material contained in this press release is intended to be general background information on ADCB and its activities and does not purport to be complete. It may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. It is not intended that this document be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending on their specific investment objectives, financial situation or particular needs.

This document may contain certain forward-looking statements with respect to certain of ADCB’s plans and its current goals and expectations relating to future financial conditions, performance and results. These statements relate to ADCB’s current view with respect to future events and are subject to change, certain risks, uncertainties and assumptions which are, in many instances, beyond ADCB’s control and have been made based upon management’s expectations and beliefs concerning future developments and their potential effect upon ADCB.

By their nature, these forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond ADCB’s control, including, among others, the UAE domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory and Governmental authorities, the impact of competition, the timing impact and other uncertainties of future acquisition or combinations within relevant industries.

As a result, ADCB’s actual future condition, performance and results may differ materially from the plans, goals and expectations set out in ADCB’s forward-looking statements and persons reading this document should not place reliance on forward-looking statements. Such forward-looking statements are made only as at the date on which such statements are made and ADCB does not undertake to update forward-looking statements contained in this document or any other forward-looking statement it may make.

© Press Release 2018