Dubai: Abu Dhabi Islamic Bank (ADIB) on Monday reported a 4.5 per cent year-on-year increase in 2018 third-quarter net profit to Dh589.5 million as impairment costs fell.
The earnings put total profit in the first nine months of this year at Dh1.75 billion, up 3.5 per cent from the Dh1.69 billion recorded in the same period of 2017.
Meanwhile, revenues for the third quarter were nearly flat, at Dh1.42 billion (a 0.2 per cent increase), putting revenues for the first nine months of 2018 at Dh4.15 billion, a 1.2 per cent decline year-on-year.
The rise in profits came as provisions and impairment charges fell 29 per cent to Dh171.7 million in the third quarter of 2018, despite the impaired financing-to-gross financing assets ratio ticking up to 5.5 per cent, up from the corresponding figure last year of 5.1 per cent.
On the balance sheet, total customer financing rose 2.1 per cent to Dh78.4 billion, while customer deposits inched down by 0.6 per cent to Dh98.5 billion at the end of the third quarter.
ADIB said in its management report that it continued to focus on “effective risk management” during what it described as “an unpredictable macroeconomic environment.”
The report also said that the bank’s balance sheet “remains solid” after it raised capital through a recent rights issue and a sukuk issuance.
The bank concluded the rights issue earlier this month, raising Dh1 billion, which ADIB said will be used to support its growth strategy while boosting its core capital.
ADIB said the impact of the rights issue will be reflected on its financials in the fourth quarter of 2018.
“This capital increase, in conjunction with issuance of $750 million [Dh2.75 billion] in additional Tier-1 capital, has resulted in [an] improving capital structure and has positioned the bank to pursue growth opportunities in line with the expected improvements in the economic environment,” said Khamis Bu Haroon, ADIB’s vice-chairman and acting chief executive officer.
Away from capital, the bank saw a 16 per cent year-on-year decline in its investment income in the third quarter to Dh122.7 million. FX income, however, jumped in the quarter to Dh78.5 million, up 19.6 per cent year-on-year.
“The UAE economy has proven resilient in recent years, and the ongoing investment in diversification will provide opportunity for ADIB to develop all its corporate and retail banking businesses in the coming years,” Bu Haroon said.