Even though ADIB will maintain a prudent approach
Even though ADIB will maintain a prudent approach, it will reinvest in the future growth of the bank. Image Credit: Ahmed Kutty/Gulf News

Dubai: Abu Dhabi Islamic Bank (ADIB) reported on Monday a 23 per cent year-on-year spike in its net profit for the fourth quarter of 2018 as revenues rose and impairment costs declined.

The bank’s profits reached Dh748.3 million in the last quarter, bringing net profit for the full year to Dh2.5 billion, an increase of 8.7 per cent over 2017.

Dh1.6b

earnings came as revenues in fourth quarter last year

The rise in earnings came as revenues increased by 13 per cent to Dh1.6 billion in the fourth quarter of 2018, and totalled Dh5.8 billion in the full year (up 2.4 per cent year-on-year).

This was due to a rise in revenue from funding, higher fees and commissions, increased investment income, and higher FX income in the fourth quarter. Both investment income and FX income were lower for the full year, however.

The bank’s board of directors recommended a cash dividend payout of 39.7 per cent of the year’s net profit.

20%

impairment costs lowered in fourth quarter of 2018

Khamis Buharoon, ADIB’s vice chairman and acting chief executive officer, said the UAE economy has been “resilient” in recent years, and said the bank sees opportunities to develop its corporate and retail banking businesses.

“While the global economic picture is uncertain, we can mitigate volatility by remaining committed to maintaining our best practice approach to risk management,” he said in ADIB’s management report.

Buharoon added that, in 2019, the bank will “maintain a prudent approach”, but plans to reinvest in the future growth of ADIB.

In terms of costs, ADIB said it had a strategy of “controlled operating expenses” while also benefiting from lower impairment costs, which fell by 20 per cent in the fourth quarter of 2018 and 21 per cent in the full year. ADIB also cut the number of its ATMs and branches by 38 machines and one branch.

On the balance sheet side, customer deposits were nearly flat year-on-year, at Dh100.4 billion (up 0.4 per cent), while customer financing rose 2.8 per cent to end the year at Dh78.7 billion.

ADIB said that income from customer financing now represents over two-thirds of its total revenues.