Abu Dhabi Islamic Bank posts 89% surge in H1 2021 net profit
Cost savings combined with increase in non-funded revenues supported profitability
Abu Dhabi: Abu Dhabi Islamic Bank (ADIB) posted a net profit of 1.1 billion for the first half of 2021, up 89 per cent year-on-year from Dh588 million in H1 2020.
The growth in net profit reflects the strong underlying performance across the business supported by a 3.4 per cent growth in total revenue to Dh2.64 billion compared to Dh2.55 billion in the same period last year.
The rebound in UAE economic activity and an improvement in business momentum lifted revenues by 3.4 per cent in H1 2021 to Dh2.64 billion versus Dh2.55 billion in H1 2020. This was driven by a growth of 19 per cent in revenues from non-funding activities offsetting the impact of the low rate environment.
The financial results were also supported by an 8 per cent decline in operating expenses with cost to income ratio improving 5 per cent due to the successful implementation of technology-led initiatives that helped reduce the cost of sales and customer acquisition while also streamlining internal processes.
“ADIB delivered robust year-on-year growth underscored by positive increases on our assets, revenues, and net profits while also maintaining a strong balance sheet, liquidity, and capital ratios. Our return on shareholders’ equity have also improved to 14 per cent, in line with our commitment to enhance our profitability and deliver superior value to our shareholders,” said Jawaan Awaidah Al Khaili, Chairman of ADIB.
Balance sheet
The bank reported total assets of Dh130.6 billion in H1 2021, up 5 per cent on H1 2020. Gross Customer financing grew by 3 per cent year-on-year growth, driven by improvements of 3 per cent in wholesale banking customer financing and 2 per cent in retail customer financing compared to H1 2020.
Customer deposits: Dh105.2 billion in H1 2021, up 6.6 per cent year-on-year with CASA [current and savings account deposits increasing by 13.9 per cent to Dh96.4 billion comprising around 92 per cent of total customer deposits.
“I am particularly pleased with our topline, year-on-year growth of 3.4% on the back of strong improvements in customer financing, customer deposits, and an increase in other sources of income, such as fees and commissions and investment income. We have progressively pursued a strict cost discipline approach which allowed us to drive our operating expenses down by per cent year on year and enabled us to achieve a 5 per cent improvement in our cost to income ratio,” said Mohamed Abdelbary, Group Chief Financial Officer.
Liquidity and capital
ADIB continues to maintain a solid liquidity position with a stable funds ratio of 83.1 per cent H1 2021 vs. 86.6 per cent H1 2020.
The bank maintained a robust capital position with common equity tier 1 ratio 13.32 per cent and capital adequacy ratio of 19.05 per cent comfortably above regulatory requirements.