Dubai: Abu Dhabi Islamic Bank (ADIB) on Sunday reported a net profit of Dh269.7 million in the first quarter of2020, down 55.1 per cent from Dh600.3 million in reported in the first quarter of 2019.
The bank attributed the decline in profit to an increase in provisioning due to the challenging operating environment, as well as the result of lower revenues, given unprecedented market conditions.
Group net revenue for Q1 2020 decreased to Dh1.29 billion from Dh1.43 bllion in Q1 2019. Despite the low rate environment, ADIB was able to maintain one of the highest net profit margin in the market of 3.8 per cent in Q1 2020.
“Our profits in the first quarter of 2020 have been impacted by the challenging macro-economic environment caused by the Covid-19 pandemic and lower revenue due to rate cuts. Given the uncertain economic outlook we increased our impairment allowances and our provisioning in anticipation of a potential deterioration in credit quality,” said Mazin Manna, ADIB Group CEO.
Total assets as of March 31, 2020 were Dh122.7 billion, representing a decrease of 2.6 per cent from Dh125.9 billion at the year-end 2019.
Net customer financing increased by 1.6 per cent to Dh79.4 billion from Dh78.1 billion at the end of Q1 2019, led by growth in corporate banking financing. CASA [current and savings account] deposits increased by 1.3 per cent year on year to Dh70.7 billion, comprising 71.6 per cent of the Dh98.9 billion total customer deposits compared to 69.4 per cent a year earlier. in Q1 2019.
Operating expenses at Dh634.9 million was lower by 2.3 per cent compared to Q1 2019.This was achieved despite investments in key strategic and digital initiatives designed to support business growth, enhance customer experience and create future efficiencies.
Credit provisions and impairments for Q1 2020 increased to Dh387.1 million from Dh186.4 million.
Liquidity and capital adequacy
Advances to stable funds ratio was 85.1 per cent at March 31 2020, compared to 82.4 pr cent at first quarter end 2019 and 84.1 per cent at year end, while the ddvances to deposit ratio of 80.3 per cent reflecting a healthy liquidity position.
The bank’s common equity tier 1 ratio of 12.3 per cent and capital adequacy ratio of 18.08 per cent remain well above regulatory requirements at the close of first quarter 2020.
ADIB said the bank has been fully supportive of the UAE Government and the UAE Central Bank’s swift actions in implementinga number of measures to mitigate the impact of the virus outbreak on individuals, businesses and theeconomy at large.
“Despite market challenges, we have been able to maintain a robust capital and liquidity position. This has enabled us to support our customers during the current period of disruption. The relief programs and support measures that we are offering to our personal and business customers have had strong take-up, and we remain responsive to their changing needs,” said Manna.