ADCB posts net profit of Dhs4.456b in H1’24

Abu Dhabi Commercial Bank PJSC (ADCB) today reported its financial results for the second quarter of 2024 (Q2’24). Strong performance in H1’24 driven by double-digit YoY growth in net interest income and non-interest income in the context of robust UAE fundamentals.According to the financial results’ statement, ADCB’s ambitious strategy for accelerated growth is driving strong momentum in the Bank’s operational and financial performance.

Net profit before tax increased 30% year-on-year to Dhs2.593 billion in the second quarter, and rose 28% to Dhs5.023 billion in the first half. On a post-tax basis, net profit for the first half was Dhs4.456 billion and was Dhs2.317 billion for the second quarter, representing a return on average tangible equity of 15.0% and 16.5% respectively.

ADCB is reinforcing its strong market position through broad-based credit growth in the context of favourable economic fundamentals in the UAE. With an operating income of over Dhs9 billion for the first half, the Bank is moving at pace, recording double-digit year-on-year growth in both net interest income and noninterest income. Rising fee income is enhancing the diversification of revenue streams, driven by deep customer relationships and a sophisticated offering across all core businesses.

ADCB is playing an increasingly central role in the region’s economic dynamism, crossing the key milestone of Dhs600 billion in total assets - having expanded at 14% compounded annual growth rate (CAGR) over the last three years. The Bank has recorded Dhs30 billion in net loan growth in the first half of the year, driven by solid demand from corporates and individual customers. This robust growth has been marked by increased exposure to high quality credits, resulting in credit risk-weighted assets increasing by only Dhs6 billion in the first six months of 2024.Given the strong loan growth achieved year-to-date and a healthy credit pipeline, ADCB is updating its full-year 2024 loan growth guidance to approximately 15%, from the previous range of 8% to 10%.

The Retail Banking Group (RBG) continues to leverage digital platforms to expand reach. By providing seamless and immediate access to a broad range of products and services, ADCB’s onboarding app is propelling growth - hitting a new monthly record of 44,000 new customer registrations in May. As the customer base grows, digital engagement also continues to increase, with internet and mobile banking subscribers up 34% year-on-year. The Bank is delivering strong loan growth in Retail, with personal loans up 10% year-on-year, auto loans 19% higher and mortgages increasing 24% as at the end of June.

The cards business is also going from strength to strength, with over 64,000 new cards issued in Q2’24(1), fueled by digital onboarding and ecosystem partnerships.The Corporate and Investment Group (CIBG) is capitalising on rising levels of corporate investment as well as capital markets activity.

The business continues to broaden its strong network of clients in the UAE and across the GCC, with over 3,500 new banking relationships established year-to-date.A strong advisory offering and sophisticated product suite have ensured that ADCB’s CIBG business maintains a market-leading fee-to-income ratio.In the second quarter, ADCB continued to grow market share through solid credit expansion, focused on high-quality credit counterparties to ensure effective capital deployment.

In line with the Bank’s strategy to rebalance its lending portfolio, loans to government-related entities (GREs) have increased considerably over the last two years to 27% of total loans, from 23% in December 2022, while exposure to real estate investment has reduced significantly to 15% from 22%.As a result, the risk-adjusted net interest margin has increased to 2.11% in the first half from 2.05% a year earlier, supported by an improvement of 15 basis points in cost of risk to 0.58%.ADCB’s strong franchise continues to attract significant customer deposits, which reached AED 390 billion at the end of June, an increase of AED 27 billion during the first half.

Despite a higher interest rate environment, current and savings account (CASA) deposits expanded by AED 21 billion over the previous year, and accounted for 44% of total deposits.ADCB’s balance sheet remains robust, supported by healthy capital ratios, with the capital adequacy and CET1 ratios strengthening to 16.43% and 13.17%, respectively at the end of June.Looking ahead, a strong focus on customer experience excellence will remain a core priority to expand market share.