Abu Dhabi: Abu Dhabi Commercial Bank PJSC (“ADCB” or the “Bank”) today reported its financial results for the first quarter of 2017 (“Q1’17”).
Financial highlights (31 March 2017)
Strong operating performance and disciplined cost management
- Net profit of AED 1.105 billion was 10% higher quarter on quarter and 8% higher year on year, while the Bank maintained a strong ROAE of 16.1% and ROAA of 1.60% for the first quarter of 2017
- Operating profit before impairment allowances of AED 1.489 billion was 3% higher quarter on quarter and 8% higher year on year, driven by the Bank’s increased revenues and tightly managed cost base
- Operating income of AED 2.229 billion was 3% higher quarter on quarter and 6% higher year on year, while operating expenses of AED 740 million remained flat year on year, driven by the Bank’s continuous efforts to manage its businesses efficiently. Cost to income ratio for Q1’17 was 33.2% compared to 34.9% in Q1’16, an improvement of 170 basis points year on year
- Total net interest and Islamic financing income of AED 1.631 billion was 4% higher quarter on quarter and year on year, despite the increasing cost of funds reflective of the tighter liquidity in the market. Cost of funds for Q1’17 was 1.45% compared to 1.17% in Q1’16 and 1.49% in Q4’16.
- Non-interest income of AED 598 million was stable quarter on quarter and 11% higher year on year, on account of higher trading income, and an increase in fees and commission income. Net trading income of AED 166 million was up 36% year on year, while net fees and commission income of AED 373 million was up 4% year on year
Resilient balance sheet, significant increase in CASA deposits
- Total assets grew 2% to AED 264 billion and net loans and advances to customers increased by 1% to AED 160 billion over 31 December 2016. As compared to 31 March 2016, total assets and net loans and advances to customers grew 14% and 6% respectively year on year
- Deposits from customers increased 4% to AED 162 billion over 31 December 2016 and 10% over 31 March 2016. Low cost current and savings account (CASA) deposits increased 10% to AED 71 billion over 31 December 2016 and comprised 44% of total deposits
- Customer deposit growth outpaced loan growth, resulting in an improved loan to deposit ratio of 98.4%
Healthy asset quality indicators, committed to maintaining a disciplined risk profile
- As at 31 March 2017, NPL and provision coverage ratios were 2.7% and 132.5% respectively
- Cost of risk for the first quarter of 2017 was 0.78% compared to 0.83% in 2016
- Collective impairment allowances were 1.80% of credit risk weighted assets, above the minimum 1.5% stipulated by the UAE Central Bank
Capital and liquidity position continue to remain strong
- Capital adequacy ratio of 17.83% and Tier 1 ratio of 14.55% as at 31 March 2017, post dividend payment of AED 2.1 billion in Q1’17
- Liquidity coverage ratio of 116% compared to a minimum ratio of 80% prescribed by UAE Central Bank
- Net lender of AED 20.6 billion in the interbank markets and a strong liquidity ratio of 25.7% as at 31 March 2017
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 months of 2017. Our ROE and CAR continued to be at industry leading levels, while we saw strong underlying performance from each of our businesses. Our stringent cost controls to drive efficiency across the Bank resulted in a significant improvement in our cost to income ratio year on year. As a highly disciplined bank, we continue to take measures to address the prevailing economic conditions with rigorous risk management and cost containment.
Our balance sheet remains resilient as we continue to grow loans and deposits, attracting customer deposits faster than the industry. This a reflection of our commitment to our strategic pillars to maintain a strong liability base and to fund future loan growth from customer deposits. While challenging markets have impacted the industry, the Bank grew its low cost CASA deposits significantly in Q1’17, which comprised 44% of total customer deposits compared to 42% at year-end.
Our results for the first three months of 2017 speak to the discipline and resilience of the Bank and reflect the strength of our strategy.”
Deepak Khullar, Group Chief Financial Officer, commented on the results:
“In addition to our strong balance sheet, we are well diversified, have healthy margins and strong controls. Our continuous efforts to diversify our revenue stream resulted in an increase of 11% in non-interest income year on year, which comprised 26.8% of operating income compared to 25.5% in Q1’16. Operating income and operating profit before impairment allowances increased 6% and 8% respectively year on year.
Our asset quality indicators also remained strong, with a provision coverage ratio of 132.5% compared to 129.9% as at 31 December 2016, while non-performing loan ratio remained stable at 2.7%. Our liquidity levels were robust, with a liquidity coverage ratio of 116% compared to UAE Central Bank requirement of 80% and liquidity ratio of 25.7% compared to 24.3% as at 31 March 2016.”
ADCB was formed in 1985 and as at 31 March 2017 employed over 4,500 people from 75 nationalities, serving retail customers and corporate clients in 48 branches, 3 pay offices and 2 branches in India, 1 branch in Jersey and representative offices in London and Singapore. As at 31 March 2017, ADCB’s total assets were AED 264 billion.
ADCB is a full-service commercial bank which offers a wide range of products and services, which include retail banking, wealth management, private banking, corporate banking, commercial banking, cash management, investment banking, corporate finance, foreign exchange, interest rate and currency derivatives and Islamic products, project finance and property management services.
ADCB is owned 62.52% by the Government of Abu Dhabi (Abu Dhabi Investment Council). Its shares are traded on the Abu Dhabi Securities Exchange. As at 31 March 2017, ADCB’s market capitalisation was AED 35 billion.