• June 25, 2018
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Abu Dhabi Commercial Bank reports 2018 Q1 financial results

Abu Dhabi Commercial Bank reported its financial results for the first quarter of 2018.

Robust underlying performance 

• Net profit of AED 1.207 billion was up 9%
• Total net interest income and Islamic financing income of AED 1.828 billion was up 12%
• Net interest margin increased to 3.19% from 2.86% in Q1’17
• Operating income of AED 2.354 billion was up 6%,
• Operating profit before impairment allowances of AED 1.584 billion was up 6%
• Gross impairment charge of AED 431 million was 15% lower
• Non-interest income of AED 526 million was 12% lower, mainly on account of lower trading income from dealing in foreign currencies and an increase in fee and commission expenses coupled with lower loan processing fees
• Cost to income ratio improved to 32.7% in Q1’18 from 33.2% in Q1’17, remaining within our target range

Outpacing the industry on customer deposit growth, with continued focus on CASA deposits

• Total assets grew 1% to AED 267 billion and net loans to customers remained unchanged at AED 163 billion over 31 December 2017, on account of significant repayments (UAE banking industry average grew 0.6%*)
• Deposits from customers increased 2% to AED 167 billion over 31 December 2017, whilst the UAE banking industry average contracted 0.4%*.
• CASA deposits increased by AED 2 billion to AED 73 billion over 31 December 2017, and comprised 43.6% of total customer deposits compared to 43.4% as at 31 December 2017
• Customer deposit growth outpaced loan growth, resulting in an improved loan to deposit ratio of 97.6% compared to 100.1% as at 31 December 2017

Strong capital and liquidity position and solid foundation to comply with evolving regulatory requirements

• Capital adequacy ratio (Basel III) of 17.48% and common equity tier 1 (CET1) ratio of 12.37% remained well above the UAE Central Bank minimum capital requirements of 12.75% and 9.25% (including buffers), post dividend payout of AED 2.2 billion and IFRS 9 adjustment of AED 1.36 billion
• Liquidity coverage ratio (LCR) of 141% compared to a minimum ratio of 90% prescribed by the UAE Central Bank
• Maintaining a strong liquidity ratio of 25.6%

Stable asset quality indicators

• NPL and provision coverage ratios of 2.2% and 179.7% compared to 2.1% and 162.9% as at 31 December 2017
• Cost of risk improved to 0.71% from 0.81% as at 31 December 2017
• Stage 1 and 2 expected credit loss allowances were 2.88% of credit risk weighted assets, above the minimum 1.5% stipulated by the UAE Central Bank
  
  

Commenting on the bank’s performance Ala’a Eraiqat, Member of the Board and Group Chief Executive Officer, said:

“The Bank had a very good start to the year, reporting strong top and bottom line growth for the first three monthsof 2018, with a net profit of AED 1.207 billion, an increase of 13% quarter on quarter and 9% year on year. Our businesses continue to perform well and our return on average equity of 16.8% continues to be at industry leading levels. In the first quarter of 2018, ADCB has successfully transitioned to the IFRS 9 accounting standard, following the smooth transition to Basel III in the last quarter of 2017, reflecting the Bank’s strong ability to comply with the evolving regulatory environment. Amidst a more controlled regulatory environment, growing competition and volatility in the markets, the Bank successfully launched and priced a USD 750 million RegS/144A bond offering in March 2018, marking the Bank’s first USD public debt issuance since 2015 and first US 144A compliant market issuance since 2009. The strong demand for the issuance was a testament to the continued growth in investor appetite for ADCB’s bonds.

Our results reflect our ability to adapt to the changing environment and our performance has once again demonstrated our stability and resilience.”

Re-disseminated by The Asian Banker