Abu Dhabi Commercial Bank (ADCB) has posted a record 27% jump in Q1 net profit of AED1.878 billion ($510 million) driven by core income generation and strong fundamentals.
The bank’s net interest income shot up 33% to AED2.851 billion, while its non-interest income increased 34% to AED1.061 billion increased 34%.
Operating income increased 33% to AED3.912 billion as cost to income ratio of 31.5% improved by 660 bps.
Operating profit
Operating profit before impairment charge soared 47% to AED2.681 billion. The bank’s total assets crossed the AED500 billion mark, with continued loan and deposit growth.
Total assets of AED501 billion increased 13% from March 2022 and 1% from December 2022.
Net loans of AED264 billion were 7% higher from Mar’22 and up 2% from Dec’22. New credit extended totalled AED20 billion in the first quarter.
Total customer deposits of AED311 billion were 19% higher from Mar’22 and up 1% from Dec’22. CASA (Current and savings account) deposits were up AED5 billion during the quarter to AED158 billion, comprising 51% of total customer deposits at March-end. Capital adequacy and CET1 ratios were 15.67% and 12.93% respectively.
Ala’a Eraiqat, ADCB Group Chief Executive Officer, said: “ADCB has maintained its growth momentum into 2023, delivering a 27% year-on-year increase in net profit to AED1.878 billion in Q1’23, which equates to a return on average tangible equity of 14.3%. ADCB’s performance is being driven by a solid balance sheet, prudent risk management, and a resilient UAE economy that benefits from strong long-term fundamentals.
Credit growth
“The bank has continued to deliver credit growth and our strong reputation in the market has attracted further deposit inflows. Growth is being generated across all our business segments. It is powered by a market-leading digital offering, with ADCB listed as the only financial institution included in the top five brands in KPMG’s UAE Customer Experience Excellence Report. The Bank is taking further steps to drive digital-enabled growth, delivering a number of new partnerships this year to provide our customers with exclusive opportunities in the UAE and internationally.
“In the first quarter, ADCB welcomed over 114,000 new retail customers, with 80% joining through our digital channels. Our cards business, personal and auto loans and mortgages provided combined asset growth of 11% year on year, reflecting positive consumer sentiment and ADCB’s ability to remain closely attuned to the market.”
Deepak Khullar, Group Chief Financial Officer, said: “ADCB has continued to display strong business and financial fundamentals. Given the global economic slowdown, the bank recognises the importance of maintaining balance sheet strength to enhance long-term resilience. ADCB retains substantial capital buffers and benefits from a strong liquidity position, with funding remaining well-diversified.
Customer deposits
“Customer deposits were up 1% sequentially and 19% higher than a year earlier, with CASA deposits increasing AED5 billion during the quarter and accounting for 51% of the total. This is a notable achievement in the context of rising benchmark rates over the last 12 months and a testament to ADCB’s strong franchise.
“The bank has continued to take a disciplined approach to managing its cost base in light of the global inflationary environment. In the first quarter, operating expenses reduced 5% sequentially, with the cost to income ratio improving to 31.5% from 38.1% a year earlier.
"While the bank is successfully delivering growth, we are also ensuring that our business is sustainable. Having embedded ESG into our corporate strategy, the bank is stepping up green financing initiatives to support clients in their decarbonisation journey.”-- TradeArabia News Service
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