Abu Dhabi Commercial Bank PJSC (“ADCB” or the “Bank”) today reported its financial results for the nine month period ended 30 September 2018 (“9M’18”).

Key highlights (30 September 2018)

• Robust performance for the nine month period, strong revenue growth driven by higher NIMs

Nine month comparison (9M’18 vs. 9M’17) 

• Net profit of AED 3.483 billion was up 9%
• Total net interest income and Islamic financing income of AED 5.417 billion was up 9%
• Operating income of AED 6.937 billion was up 5%
• Operating profit before impairment allowances of AED 4.593 billion was up 4%
• Impairment allowances (net) of AED 1.117 billion was 9% lower
• Non-interest income of AED 1.521 billion was 5% lower
• Net interest margin of 3.07% compared to 2.89% in 9M’17
• Optimal management of cost of funds, improved cost of risk and continued investment in digital transformation
• Cost to income ratio for 9M’18 was 33.8% compared to 32.6% in 9M’17, remaining within our target range
• Cost of funds for 9M’18 was 1.86% compared to 1.46% in 9M’17, increasing less than benchmark rates
• Cost of risk for 9M’18 improved to 0.67% from 0.81% in 9M’17
• As at 30 September 2018, NPL and provision coverage ratios were 2.97% and 133.0% respectively, compared to 2.12% and 162.9% as at 31 December 2017
• Comfortable liquidity position
• Net loans and advances increased 1% to AED 165 billion over 31 December 2017
• Deposits from customers increased 4% to AED 170 billion over 31 December 2017
• Low cost CASA (Current and savings account) deposits comprised 41 % of total customer deposits
• Loan to deposit ratio of 97.3% compared to 100.1% as at 31 December 2017
• Maintaining a strong liquidity ratio of 27.0%
• Net lender of AED 11 billion in the interbank markets
• Liquidity coverage ratio (LCR) of 123% compared to a minimum ratio of 90% prescribed by UAE Central Bank
• Strong capital ratios
• Capital adequacy ratio (Basel III) of 16.90% and common equity tier 1 (CET1) ratio of 12.98% remained above the UAE Central Bank minimum capital requirements of 12.75% and 9.25% (including buffers) 

Note: On 3 September 2018, ADCB announced the commencement of exploratory talks regarding a potential merger with Union National Bank, as well as similar and separate discussions with Al Hilal Bank. At this time, there is no certainty that these negotiations will result in a transaction. ADCB is committed to the highest standards of regulatory disclosure and will update the market if and when there are any material developments.

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

“We are pleased with the Bank’s performance for the nine-month period of 2018. Net profit for the third quarter was up 5% year on year, while year-to-date net profit was up 9% over the prior year, with a solid return on equity of 15.7%.

The Bank continues to focus on creating sustainable value for all our stakeholders through economic cycles within a robust governance and risk framework.

Central to our approach is implementing strict discipline in pricing risk and on managing exposure and concentration, enforced by board and management level committees. At a time when the financial services industry is changing rapidly, including the implementation of Basel III and IFRS9, ADCB is focused on stringent compliance with industry and market regulations, while engaging proactively with regulators to ensure that the Bank stays ahead of the curve. Implementing the highest levels of governance concerns the whole organisation and requires significant focus. Therefore culture metrics account for a high portion of our employees’ performance assessments to promote ADCB’s ethical and service values: integrity, respect, ambition, discipline and care.

Furthermore, the operating environment continues to be influenced by rapid changes in technology, transforming customer expectations and behaviour. We are therefore investing heavily in digital transformation, talent development and IT security to position ourselves as a progressive player in this evolving environment. Implementation of our strategy is guided by a clear and compelling vision, and a strong set of shared values.

We remain positive on the outlook for the UAE economy as new reforms, initiatives and economic stimulus launched by the Government drive further growth. We will continue to create long-term value for our customers and shareholders.”

Deepak Khullar, Group Chief Financial Officer, commented on the results:

“The Bank posted a strong set of results for the third quarter with top and bottom line growth remaining healthy over the previous year. For the nine-month period of 2018, operating income of AED 6.937 billion was up 5%, and operating profit (after impairment allowances) of AED 3.476 billion was up 8% year on year.  

Net loans were up 1% year to date, with the Bank continuing to de-risk its unsecured retail loan portfolio, while growing its Wholesale Banking loans by 5%. Customer deposits were up 4%, mainly on account of an increase in corporate time deposits.

In October 2018, the Bank’s credit rating was re-affirmed by S&P at A/Stable/A-1, a testament to our well-established franchise, stable management, and balanced earnings generation across different business segments. Our capital ratios remain strong, with a CET1 ratio of 12.98% and total CAR of 16.90% as at 30 September 2018.

This has been another good quarter for the Bank, with improvements in profitability, as we continue to invest significant resources in our business within a strong control framework.”

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