Dubai: Abu Dhabi Islamic Bank’s (ADIB) net profit surged in 125 per cent in Q1 to Dh608 million compared to Dh270 million in Q1 2020 and by 26 per cent compared to Q4 2020.
The growth in net profits reflects the strong underlying performance across the business.
"The Q1 result reflects our strong underlying performance across our all our businesses, partially driven by a rapidly improving economy which allowed us to decrease our impairment by 66 per cent compared to Q1 2020. This solid first quarter was also achieved through continued cost discipline which saw our operating expenses improve by 7 per cent year on year, as well as sustained business momentum and targeted strategic initiatives which partially offset the headwinds from record low rates and the overall economic slowdown brought about by the pandemic," said Jawaan Awaidah Al Khaili, Chairman of ADIB.
Revenue and costs
Revenue increased 3.3 per cent to Dh1.33 billion versus Dh1.29 billion in the same period last year. The rebound in UAE economic activity and an improvement in business momentum lifted revenues. This was driven by a growth of 30 per cent in revenues from non-funding activities offsetting the impact of the low rate environment.
Operating expenses were reduced by 7 per centyear-on year 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 maintained one of the highest net profit margins in the market of 3.15 per cent Q1 2021 compared to 3.84 per cent Q1 2020, supported by one of the lowest cost of funds in the market.
Net impairment charges decreased by 65.5 per cent to Dh133.5 million in Q1 2021 from Dh387.1 million in Q1 2020.
Strong balance sheet
Total assets at Dh130.7 billion in Q1 2021 were up 6.5 per cent on Q1 2020. Customer financing grew 5.5 per cent year-on-year driven primarily by wholesale banking customer financing growth which grew 11.2 per cent. Customer deposits were up 5 per cent in Q1 to Dh103.1 billion
Liquidity and capital
ADIB continues to maintain a solid liquidity position with a stable funds ratio of 84.4 per cent Q1 2021 compared to 85.1 per cent Q1 2020. The bank maintained a robust capital position with common equity Tier 1 ratio 13.35 per cent and capital adequacy ratio of 19.20 per cent comfortably above regulatory requirements.