ADIB expects to post single-digit credit growth

Abu Dhabi: Abu Dhabi Islamic Bank's (ADIB) chief executive indicated yesterday the bank would post single-digit credit growth this financial year with the lender not having reached a point of saturation in provisions yet.

"The credit growth, in general,... [will be] fine. We don't see double digit growth, we don't see zero growth. We will go through a period of adjustment [with regard to] consumer credit growth," Tirad Mahmoud told reporters here at a news conference.

Mahmoud said the bank has adequate liquidity and its capital adequacy ratio (CAR) is way above what's required in the country.

"We are at 16 per cent, which is way above the minimum CAR requirement. Abu Dhabi Islamic Bank is a net provider of funds in the inter-bank market," said Mahmoud.

Speaking about provisions, Mahmoud said ADIB reviews its provisions every quarter and makes adjustments every quarter following the international best practices. Looking ahead, he said the provisioning at ADIB will continue.

Shares slip

ADIB booked credit provisions and impairments of Dh224.4 million in the fourth quarter of the last financial year. The bank reported a net profit of Dh250.6 million in the three months to December 31, compared to a loss of Dh623 million in the same quarter a year earlier.

Mahmoud also said ADIB's $800 million sukuk is due for retirement next December.

"We have to study the market conditions. That decision will be made in September [whether] to retire it or [to] go [in] for re-financing," he added.

The shares of Abu Dhabi Islamic Bank ended 0.66 per cent lower yesterday, closing at Dh3 on the Abu Dhabi Securities Exchange, in contrast with the positive broader market sentiments.

Education campaign

Separately, the Abu Dhabi Islamic Bank launched yesterday its financial education campaign in the UAE.

"The government has been calling financial institutions to promote higher awareness of financial management at the consumer level. We have relied on international benchmarks [to determine] the right amount of savings and the right amount of debt...the essentials you should plan for," said Mahmoud.

The bank is studying the impact of new Central Bank rules that will limit loans to individuals and service charges, he said..

The Central Bank has capped personal loans at 20 times the salary or the monthly income of a borrower with a repayment period set at 48 months, it said in a statement last month.

Mahmoud said the lender continues to have adequate liquidity but would like to see the government and public sector issue more Sharia-compliant financial instruments to deploy excess funds.

— With inputs from Reuters