Dubai: Abu Dhabi Commercial Bank (ADCB) on Tuesday reported a net profit of Dh4.84 billion for 2018, up 13 per cent year on year.

For the fourth quarter of 2018, the bank’s net profits surged 27 per cent to Dh1.35 billion compared to Dh1.07 billion in the same quarter last year.

As a result of the bank’s strong performance in 2018, the board has recommended a cash dividend of Dh0.46 per share, translating to a pay out of Dh2.391 billion, equivalent to 49 per cent of net profit.

The bank’s total assets grew 6 per cent last year to Dh280 billion and net loans to customers increased 2 per cent to Dh166 billion. Deposits from customers increased 8 per cent during the year to Dh177 billion, low cost CASA (current and savings accounts) deposits comprised 39.4 per cent of total customer deposits. At the close of the year, the bank’s loans to deposit ratio improved to 94.2 per cent from 100.1 per cent in 2017.

“ADCB has once again demonstrated the strength and the resilience required to deliver a strong return for our shareholders. We saw our full year net profit rise by 13 per cent, while our quarterly net profit surged 27 per cent over the prior year to a record high,” said Ala’a Eraiqat, Member of the Board and Group Chief Executive Officer.

ADCB’s total net interest income and Islamic financing income increased 8 per cent year on year to Dh7.21 billion. The bank’s operating income increased by 3 per cent last year to Dh9.18 with the operating profit before impairment allowances at Dh6.09 billion, up 3 per cent year on year. For the year 2018, non-interest income was down 11 per cent to Dh1.96 billion as net interest margin improved to 3.04 per cent last year compared to 2.91 per cent in 2017.

Asset quality

Impairment allowances for the full year was down 24 per cent to Dh1.26 billion compared to Dh1.67 billion reported for the year 2017. Overall, the bank’s asset quality improved during the year. Non-performing loans (NPL) ratio for the year was 2.9 per cent compared to 2.1 per cent as at December 31, 2017. At the yearend 2018, provision coverage ratio was 130.2 per cent compared to 162.9 per cent for 2017. Collective impairment allowances at the yearend 2018 were 2.32 per cent of credit risk weighted assets.

“In 2018, despite continued headwinds, our net profit improved significantly year on year, our operating income rose to a record high, while all other significant metrics remained healthy,” said Eissa Mohamed Al Suwaidi, Chairman of ADCB.

The bank’s capital and liquidity positions remained strong with capital adequacy ratio (Basel III) of 17.26 per cent and common equity tier 1 (CET1) ratio of 13.4 per cent.

Looking ahead, the bank is set to become the third largest bank by assets with a total assets of Dh420 billin following the proposed merger with Union National Bank and Al Hilal Bank.

“We are now on the cusp of another significant moment in our history, as we prepare to merge with Union National Bank and together acquire Al Hilal Bank. This will create a more resilient, powerful financial services group, which will help to support our economy. This merger will be subject to the approval of shareholders and regulators,” said Al Suwaidi.