Abu Dhabi Commercial Bank’s first quarter earnings drop, shares plunge

The bank’s stock price lost 3.7% on Tuesday to AED9.1

  
General view of Abu Dhabi Commercial Bank logo on January 4, 2017 in Dubai, United Arab Emirates.

General view of Abu Dhabi Commercial Bank logo on January 4, 2017 in Dubai, United Arab Emirates.

Getty Images/Tom Dulat

Abu Dhabi Commercial Bank reported a drop in first quarter (Q1) net profit for 2019, triggering a retreat in the company’s shares.

The bank reported a net profit of 1.15 billion United Arab Emirates dirhams ($313.08 million) for Q1 2019, compared to 1.21 billion dirhams in Q1 2018, a 4.96 percent drop.

Net interest and Islamic financing income amounted to 1.71 billion dirhams in Q1 2019, compared to 1.83 billion dirhams in Q1 2018, a 6.56 percent drop.

Deposits from customers increased by 4 percent to AED 184 billion, while the loan-to-deposit ratio improved to 91.7 percent from 94.2 percent as at 31 December 2018, the bank said in a press release that followed the earnings announcement. Net loan growth to customers increased by 2 percent to 169 billion dirhams.

“We see this as an overall weak result, save for the lending and deposits book growth,” Chiro Ghosh, lead research analyst for financial institutions at investment bank SICO told Zawya by email.

“The bank reported a NIM (net interest margin) of 2.75 percent, down by 44 basis points YoY (year-on-year) and 20 basis points QoQ (quarter-on-quarter),” Ghosh said.

“We were expecting NIM to stablise with likely no rate hike (by the U.S. Federal Reserve), however the funding cost pressure came as a surprise,” he added.

The bank’s stock price fell 3.7 percent to 9.1 dirhams on Tuesday and has added 11.27 percent so far since the start of the year 2019. Ghosh had told Zawya by 11:32 GST on Tuesday that he expects the bank’s stock price “to remain weak.”

ADCB, Union National Bank (UNB) and Al Hilal Bank announced on May 1 that a three-way merger between the institutions had completed. The merger has created the third biggest bank in the UAE. (Read more here)

ADCB’s group chief executive officer Ala’a Eraiqat said in the press release accompanying its Q1 results that they “are already making rapid progress in integrating the three organisations (ADCB,UNB and Al Hilal).”

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)

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© ZAWYA 2019

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