Abu Dhabi: Abu Dhabi Commercial Bank PJSC (ADCB) today reported its financial results for the first quarter of 2024 (Q1’24).
Strong momentum into 2024 amid robust UAE economy
Key highlights – Q1’24 vs. Q1’23
- Net profit before tax of AED 2.431 bn increased 26%(1)
- Net profit after tax of AED 2.139 bn
- Net-interest income of AED 3.301 bn increased 16%
- Non-interest income of AED 1.285 bn increased 21%
- Operating income of AED 4.586 bn increased 17%
- Cost to income ratio of 30.9% improved by 60 bps
- Operating profit before impairment charge of AED 3.169 bn increased 18%
Strong franchise driving net loan growth of AED 55 bn and customer deposit growth of AED 73 bn over the last 12 months
- Total assets of AED 594 bn increased 19% YoY and 5% QoQ. Total average interest earning assets of AED 492 bn, were up 17% YoY and 6% QoQ.
- Net loans of AED 318 bn were up 21% YoY (AED 55 bn) and 5% QoQ (AED 16 bn). New credit extended totalled AED 41 bn during the quarter (excluding repayments).
- Total customer deposits of AED 384 bn were up 24% YoY (AED 73 bn) and 6% QoQ (AED 21 bn).
CASA (current and savings account) deposits stood at AED 180 bn, up 7% QoQ (AED 12 bn), comprising 47% of total customer deposits.
- Capital adequacy and CET1 ratios strengthened to 16.26% and 12.96% respectively from 16.22% and 12.86% as at December-end.
- Liquidity coverage ratio (LCR) stood at 139.8%, while loan to deposit (LTD) ratio was 82.9%.
- Cost of risk improved to 0.67% from 1.02% in Q4’23. The NPL ratio improved further to 3.44%, its lowest level since 2020, from 3.73% at December-end.
- Provision coverage ratio improved to 108.5% from 102.5% at December-end, and including collateral, the provision coverage ratio was 167%.
Commentary on Q1’24 financial results
ADCB has continued growth momentum into 2024, delivering a first quarter net profit before tax of AED 2.431 billion, an increase of 26% year on year. Net profit after tax was AED 2.139 billion, with a return on average tangible equity of 14.1%.
This strong earnings growth was broad-based and primarily driven by solid loan growth in the Corporate and Investment Banking and Retail Banking businesses.
The Corporate and Investment Banking Group (CIBG) continued to enhance its UAE and regional market share. CIBG net loans grew 7% during the quarter and 28% year on year. The business is pursuing a strategy to build banking relationships across key regional economic corridors, and is making good progress on the opening of a branch in Saudi Arabia following formal approval in January 2024. CIBG is achieving a market-leading fee-to-income ratio by enhancing its sophisticated product suite and building on its strong track record in structuring complex transactions, loan syndications and capital markets advisory business.
The Bank’s approach of fostering growth in the SME sector continues to gain momentum, with the creation of over 1,500 new banking relationships in the first quarter, powered by digital platforms that provide convenient self-service solutions.
The Retail Banking Group experienced another strong quarter with a quarterly record of c.70,000 credit cards issued. The personal loan portfolio was 12% higher year on year, with auto loans up 28% and mortgages rising 26%. Over 205,000 new customers joined the Bank in the first quarter, with 84% onboarded digitally.
With the UAE economy displaying solid fundamentals amid substantial domestic investment, ADCB Group achieved net loan growth of 5% quarter on quarter and 21% year on year. The Bank further increased its exposure to the government and public sector, which now accounts for 27% of total loans, up from 25% at December-end. Meanwhile exposure to the real estate sector reduced to 16% from 17% at the end of 2023.
ADCB’s strong franchise continues to attract substantial deposit inflows. During the quarter, total customer deposits increased by 6% from December-end and 24% year on year. The Bank attracted 152,000 new Current and Savings Account (CASA) customers and AED 12 billion of CASA deposits in the quarter. CASA deposits now represent 47% of total customer deposits.
Benefitting from a robust balance sheet, the Bank is well positioned to drive further growth, with the capital adequacy and CET1 ratios strengthening during the quarter to 16.26% and 12.96% respectively.
Revenues remained well diversified. Net interest income increased to AED 3.301 billion in Q1’24, up 16% year on year driven by sustained loan growth over several quarters in a high interest rate environment. This was also a strong quarter in terms of non-interest income, which was up 21% year on year at AED 1.285 billion on double-digit growth in fee and commission income and trading income.
The cost to income ratio stood at 30.9% in the first quarter, an improvement of 60 basis points from a year earlier and 110 basis points on the previous quarter. The Bank continues to create additional efficiencies through the application of AI and machine learning across operations and internal controls, supporting expansion while further enhancing risk management.
Substantial progress on sustainability is also enhancing our long-term organisational resilience. In the coming months, we will be focused on implementing our roadmap to meet commitments under the Net Zero Banking Alliance (NZBA) and increasing sustainable financing towards the Bank’s 2030 target of AED 125 billion, and 2025 target of AED 50 billion. As part of this commitment, ADCB is rapidly growing its eligible green loan portfolio, which increased by 58% over six months to reach AED 10 billion at the end of 2023.
