Abu Dhabi: Abu Dhabi Islamic Bank (ADIB) on Sunday reported a net profit of Dh1.6 billion for the full year 2020 compared to Dh2.6 billion in 2019.
Profitability was lower year-on-year reflecting unprecedented market conditions, record low rates and the pandemic-driven economic slowdown.
The Bank continued to exercise a rigorous approach to cost, which resulted in a reduction of 7.7 per cent year on year in operating expenses; achieved by the successful implementation of technology-led initiatives that helped to reduce the cost of sales and customer acquisition while also streamlining internal processes. ADIB demonstrated balance sheet strength ending the year with solid liquidity, funding, and capital ratios.
“In an incredibly challenging year brought upon by the global COVID-19 pandemic, ADIB demonstrated strength, resilience and adaptability. We ended the year with encouraging results against a macro backdrop of ongoing economic uncertainty. We did not allow global headwinds to impact our long track record of delivering strong operational and financial results,” said Jawaan Awaidah Al Khaili, Chairman of ADIB.
Revenue
Group Revenue for the full year ended 31 December 2020 was Dh5.35 billion compared to Dh5.91 billion FY2019, in the prior year period.
Income from financing activities in 2020 was Dh3.32 billion, down 12.9 per cent from 2019 primarily due to a balance sheet repricing driven by the impact of a low-rate environment.
This was partially offset by an increase in other sources of income, such as investment income, and the benefits of the bank’s cost discipline exercise.
Income from non-financing activities which contributes 38 per cent of total income, reached Dh2.03 billion 2020, down Dh63 million from 2019. Fees and commissions were 8.4 per cent lower year-on-year reflecting the slowdown in activity due to the pandemic.
“While our 2020 profitability was affected by the need to increase impairments due to economic uncertainty, our promising second half of 2020 results demonstrate we are on the right track. The strength of our retail banking business continues to drive ADIB’s performance,” said Mohamed Abdelbary, Chief Financial Officer of ADIB.
Costs
Amid ongoing investments in key strategic and digital initiatives, operating expenses decreased 7.7 per cent year-on-year as a result of the successful implementation of cost initiatives and the efficacy of the digital strategy.
Balance sheet
Total assets grew 1.5 per cent year-on-year to Dh 127.8 billion. Customer financing increased 2.8 per cent year-on-year to Dh83.4 billion, primarily driven by 8.6 per cent growth in corporate financing. Customer deposits were at Dh101.3 billion. Current Account and Savings Account (CASA) balances grew 12.3 per cent to Dh89.3 billion, and now represent 88.2 per cent of total deposits.
Asset quality
Non-Performing Assets were Dh7.7 billion as of December-end 2020, compared to Dh5.4 billion at the end of 2019, reflecting a challenging operating environment. Credit provisions and impairments increased by 99.7 per cent to Dh1.31billion in 2020 compared to Dh658.1 million 2019.
Liquidity and capital
ADIB recorded a healthy custome financing-to-deposits ratio of 82.4 per cent in 2020. The bank maintained its strong liquidity position with Stable fund ratio of 85.8 per cent and remains comfortably in excess of regulatory requirement. Capital adequacy ratio was 19.4 per cent, Tier 1 capital ratio was 18.32 per cent and common equity Tier 1 ratio 13.54 per cent at yearend 2020.
