ADIB online banking
ADIB's 2021 numbers place it on a solid footing, more so as it expands its reach into new client demographics, Image Credit: Shutterstock

The banking industry in the UAE, which is the most active in the region, is having a good year against the backdrop of significant reforms, current and upcoming.

The banking system’s liquidity, cost-to-income ratio, and return on equity all remained constant during the year, and the collective capital position remained robust. The Abu Dhabi Islamic Bank (ADIB) is an exemplar of all the progress the sector is making.

ADIB, which has a Dh26.2 billion market valuation, recorded a 45 per cent year-over-year rise from the Dh1.60 billion reported in 2020, by declaring a net profit of Dh2.33 billion for 2021. Revenues increased 4 per cent to Dh5.56 billion from Dh 5.35 billion.

Read more

After considering the proposed dividend for 2021, ADIB has maintained a strong capital position, with a common equity Tier 1 ratio of 12.93 per cent and a capital adequacy ratio of 18.57 per cent. With the advances to stable funding ratio at 84.1 per cent and the eligible liquid asset ratio at 19.7 per cent, the bank’s liquidity situation is strong and comfortably in line with regulatory limits.

New suite of services

ADIB in the recent past has come up with unique services and products and which will provide long-term value for shareholders. It was able to adjust to a new operating environment while continuing to invest in talent and technologies to support future growth, and also have this reflected in 2021’s solid earnings.

Net profit for the three-month period to the end of March rose 18 per cent to Dh715 million from a year earlier. Revenues climbed 6 per cent to Dh1.41 billion, driven by a 12 per cent annual increase in non-funded income to Dh620 million and a 1 per cent growth in funded income to Dh789 million.

All of which makes Abu Dhabi Islamic Bank bullish about double-digit profit growth for the full year. It has a twelve-month dividend yield of 3.81 per cent.

Biometric authentication
Recently, ADIB reached an arrangement with Visa to advance digital payments in the UAE. ADIB will start integrating the Visa network into all of its protected card and debit card portfolios. For Visa e-commerce transactions, ADIB was one of the first banks to deploy a biometric authentication system in the UAE.