ADCB’s first quarter net profits down 18.4% to Dh1.02b

28/04/2016 05:46 AST

Abu Dhabi Commercial Bank (ADCB) on Wednesday reported a net profit of Dh1.02 billion for the first quarter of 2016, down 18.4 per cent compared to Dh1.25 billion reported in the same quarter last year.

Operating income during the first 3 months of the year was down 4 per cent year on year and up 5 per cent quarter on quarter.

The decline in year on year first quarter profits is attributed to the absence of significant one-off incomes that benefited the first quarter results of last year.

“2015 was a record year for the Bank, we outperformed our peers in many key measures; yet in a very challenging operating environment we remain committed to preserving and protecting the long term financial strength of the bank in our pursuit of sustainable growth,” said Ala’a Eraiqat, Member of the Board and Group Chief Executive Officer of ADCB.

The bank’s net interest and Islamic financing income of Dh1.57 billion was 7 per cent higher quarter on quarter, driven by higher volumes and 4 per cent lower year on year, impacted by higher funding costs. Net income from Islamic financing of Dh150 million was 3 per cent lower quarter on quarter, and recorded a strong growth of 15 per cent year on year.

Non-interest income of Dh539 million was stable quarter on quarter and 2 per cent lower year on year. Net retail banking fees (excluding brokerage) of Dh176 million for the quarter registered a strong 29 per cent growth year on year, driven by higher loan volumes and credit card spend.

Bank’s total assets grew by 12 per cent to Dh232 billion and net loans and advances increased by 11 per cent to Dh157 billion over 31 March 2015. In a tight liquidity environment, deposits from customers increased 15 per cent to Dh147 billion over 31 March 2015.

A strong deposit gathering franchise coupled with a leading cash management product offering resulted in low cost current and savings account (CASA) deposits increasing 11 per cent to Dh65 billion over 31 March 2015 and comprising 44 per cent of total deposits.

While the advances to stable resources was at a healthy 89 per cent at the close of the quarter. Customer deposit growth outpaced loan growth resulting in an improved loan to deposit ratio of 106.3 per cent.

Intense competition
“Our results reflect our ability to adapt to the changing macro environment. Whilst markets remain uncertain and volatile, our balance sheet remains resilient. We continue to place high priority on maintaining adequate sources of funding and liquidity. Despite the tightening liquidity environment and intense competition, our total customer deposits grew 15 per cent year on year, driven by an increase in both CASA and time deposits,” said Deepak Khullar, Group Chief Financial Officer of ADCB.

The bank’s cost to income ratio for the quarter was 34.9 per cent. Asset quality metrics remains strong with NPL and provision coverage ratios at 3.4 per cent and 112.1 per cent, respectively at the close of the quarter. Impairment charges net of recoveries in the first quarter of 2016 was Dh361 million compared to Dh241 million in the same quarter in 2015.

ADCB reported strong capital adequacy ratio of 18.09 per cent and Tier 1 ratio of 14.74 per cent as at the close of the first quarter of 2016. A net lender of Dh22.6 billion in the interbank markets as at 31 March 2016, the bank has a liquidity ratio of 24.3 per cent.

Gulfnews