Abu Dhabi Commercial Bank PJSC Reports First Half 2018 Net Profit of Dh2.332 Billion

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.”