Dubai: Abu Dhabi Commercial Bank (ADCB) on Wednesday reported a net profit of Dh3.17 billion for the first nine months of this year, up 16 per cent compared to the same period last year.
During the nine-moth period, ADCB’s operating income was up 2 per cent to Dh5.645 billion. The results for the same period last year included a one-off gain of Dh100 million arising from retirement of hedges. Excluding the non-recurring gain, the bank reported an increase of 3 per cent in operating income and 6 per cent increase in non-interest income to Dh1.42 billion in the first nine months of this year.
“The bank’s strong performance for the nine month period of 2014 reflects the emphasis we place on sustainable growth and our commitment to our strategic pillars. ADCB has a strong and conservative balance sheet that gives us the platform to accelerate business growth in the UAE,” said Ala’a Eraiqat, Member of the Board and Chief Executive Officer.
For the third quarter of the year, the bank reported a net profit of Dh1 billion, up 11 per cent compared to the third quarter of 2013.
“ADCB reported 16 per cent year on year growth in its bottom-line during the third quarter of 2014 mainly due to a huge decline in provision expenses. The bank recorded a massive drop in its provisions due to improvement in asset quality. The bank’s operating income remained disappointing with marginal growth in both net and non-interest income,” Naveed Ahmed, Senior Manager, Research Group at Global Investment House.
For the nine-month period, ADCB’s net fees and commission income was up 19 per cent at Dh896 million. The bank reported significant improvement in cost of funds. While interest expense improved 20 per cent year on year to Dh1.05 billion in the first nine months of the year, cost to income ratio was 32.8 per cent.
As at 30 September 2014, ADCB’s non-performing loans (NPL) and provision coverage ratios improved to 3.4 per cent and 128.7 per cent respectively, compared to 4.1 per cent and 109.7 per cent, respectively, as at 31 December 2013.
“For the nine month period, key drivers for growth included continued improvement in our funding profile, with cost of funds at 0.90 per cent, robust fee income growth, up 19 per cent year on year at Dh896 million and improvement in our asset quality, with total impairment charges at Dh608 million,” said Deepak Khullar, Group Chief Financial Officer of ADCB.
The bank continued to maintain a strong and conservative balance sheet with a net loan growth of 3 per cent in the nine-month period to Dh136 billion. On the liability side, customer deposits were up 5 per cent to Dh122 billion over 31 December 2013. CASA [current and savings account] deposits accounted for 47 per cent of total deposits at the close of the third quarter of this year compared to 39 per cent as at 31 December 2013.
The bank reported a capital adequacy ratio of 21.25 per cent and Tier 1 ratio of 16.9 per cent at the close of the third quarter. Liquidity position was strong as it remained a lender of Dh16 billion in the interbank markets. ADCB’s loan to deposit ratio improved to 111.8 per cent from 114.1 per cent as at 31 December 2013.
