Recommended dividend of AED 0.56 per share, representing a total payout of AED 4.099 billion and equivalent to 50% of net profit
Abu Dhabi: –Abu Dhabi Commercial Bank PJSC (ADCB) today reported its financial results for the full-year 2023 (FY’23) and the fourth quarter of 2023 (Q4’23).
Strong growth in diverse income streams amid positive UAE consumer and business sentiment
Key highlights – FY’23 vs. FY’22
• Net profit of AED 8.206 bn increased 28%
• Net interest income of AED 12.374 bn increased 21%
• Non-interest income of AED 4.493 bn increased 8%
• Operating income of AED 16.866 bn increased 18%
• Cost to income ratio of 32.3% improved by 180 bps
• Operating profit before impairment charge of AED 11.414 bn increased 21%
Key highlights – Q4’23 vs. Q4’22
• Net profit of AED 2.454 bn increased 38%
• Net interest income of AED 3.413 bn increased 17%
• Non-interest income of AED 1.249 bn decreased 16%
• Operating income of AED 4.662 bn increased 6%
• Cost to income ratio of 32.0% increased 240 bps
• Operating profit before impairment charge of AED 3.171 bn increased 2%
Franchise strength driving significant growth in net loans and deposits of 17% YoY
- Total assets of AED 567 bn increased 14% YoY and 6% QoQ.
• Net loans of AED 302 bn, up 17% YoY and 6% QoQ.
New credit extended totaled AED 74 bn in FY’23,while AED 37 bn in repayments were received.
• Total average interest earning assets increased 8% YoY to AED 438 bn.
• Total customer deposits of AED 363 bn were 17% higher YoY and up 10% QoQ. CASA (Current and Savings account) deposits were AED 167 bn at December-end, and comprised 46% of total customer deposits.
Capital adequacy and CET1 ratios were 16.22% and 12.86% respectively.
• Liquidity coverage ratio (LCR) stood at 158.1%.
• Cost of risk was 79 bps for FY’23. The NPL ratio improved significantly to 3.73%, its lowest level since 2020, from 5.25% a year earlier. Including
POCI, the NPL ratio was 4.20% compared to 6.07% as at December 2022.
• Provision coverage ratio was 102.5% and, when including collateral, was 168%.
Key recent business and operational highlights
- ADCB joined the UN-convened global Net Zero Banking Alliance (NZBA) in November 2023 and tripled its sustainable finance commitment to AED 125 billion by 2030. The Bank actively participated in the COP28 climate conference hosted by the UAE to support the nation’s net zero climate agenda.
• ADCB divested an 80% stake in Abu Dhabi Commercial Properties (ADCP) in December 2023 to Nine Yards Plus Holdings, a subsidiary of Ethmar International Holding. The Bank recorded a net gain of AED 490 million on this transaction including fair value gain on 20% retained interest. The transaction unlocked value for ADCB shareholders, while improving the market positioning of ADCP through a partnership with a company growing rapidly in the real estate sector.
• The Bank successfully issued USD 750 million in Additional Tier 1 (AT1) bonds in November 2023. After receiving over USD 4 billion of orders from a diverse group of global investors, the issuance was priced at 8.0% following tightening of 62.5 bps from initial pricing guidance. - The cards business had its best year ever. In Q4’23, ADCB was the number one issuer of credit cards in the UAE with over 58,000 new cards issued. This represented 44% of new cards issued by the UAE’s three largest banks, and 21% share of the total UAE market in the quarter.
• In January 2024, ADCB obtained approval from the Saudi Arabia’s Council of Ministers to establish a presence in the Kingdom.
The Bank intends to fulfil all technical and regulatory requirements stipulated by the Saudi Central Bank (SAMA) before commencing operations from a new branch in Riyadh. ADCB will provide a comprehensive range of services for corporate and institutional clients, including financing and working capital solutions, mandated by a Foreign Banking Branch licence.
• In January 2024, ADCB received a significant ESG rating upgrade by Sustainalytics to “low risk” with a score of 12.5. This placed ADCB as the highest ranked bank in the MENA region and in the top 6% of over 15,000 companies globally covered by the rating agency.
H.E. KHALDOON AL MUBARAK
Chairman
“In 2023, ADCB successfully navigated a dynamic global economic landscape to deliver strong growth, further solidifying its position as a leading financial institution and a vital catalyst for the UAE’s economic ambitions.
Our relentless pursuit of excellence, digital and customer experience innovation, and strategic growth has yielded significant financial achievements and resilience across all metrics, delivering value for our customers and all stakeholders.
In line with the UAE’s Net Zero by 2050 commitment, ADCB is strategically positioned as a leader in financing decarbonization and transforming energy systems globally. The Bank’s participation in the global Net Zero Banking Alliance (NZBA), its tripling of sustainable financing commitment, and its development of a comprehensive suite of green products and services underscore its dedication to supporting customers in their climate targets.
On behalf of the Board of ADCB, I would like to express our sincere appreciation to His Highness Sheikh Mohamed Bin Zayed Al Nahyan, the UAE President and
Ruler of Abu Dhabi and His Highness Sheikh Mansour Bin Zayed Al Nahyan, UAE Vice President, Deputy Prime Minister, and Chairman of the Presidential Court, and Chairman of the UAE Central Bank, for their continued guidance and support”
ALA’A ERAIQAT
Group Chief Executive Officer
“ADCB has continued to successfully execute its strategy, generating strong growth in core earnings and forging progress on all fronts ahead of schedule.
The transformation of the Bank over the last three years has been remarkable in terms of the scale and strength of the business. Over this short timeframe, net profit has increased at a compounded annual growth rate (CAGR) of 25% to AED 8.206 billion in 2023, with return on average tangible equity increasing to 15.1%, from 11.4% in 2021. This has been accompanied by significant efficiency gains as the cost to income ratio improved by 240 basis points over the three year period. The balance sheet has expanded rapidly, with net loans increasing by 24% to cross the AED 300 billion milestone and deposits growing by 37% since 2021. Asset quality has also trended in a positive direction, with the NPL ratio improving to 3.73% from 5.41% in 2021.
ADCB set a new record for full-year earnings, with momentum building each quarter to reach a net profit of AED 2.454 billion in the fourth quarter, an increase of 38% year on year. Fully focused on increasing market share through unrivalled service excellence, the Bank has driven rapid progress to enhance the digital experience, expand core businesses, create platform partnerships and promote sustainability.
The Retail Banking Group experienced strong momentum, with disbursement of personal loans, mortgages and auto loans reaching their highest levels. The cards business had its best year ever and was the number one issuer of credit cards in the fourth quarter, with a 21% market share in the UAE. The Bank welcomed approximately 220,000 credit card customers, 82% higher than the previous year, driven by digital onboarding and new partnerships – including with food delivery company Talabat – that resonated with customers.
ADCB is investing significantly in digital innovation, which is driving growth, higher productivity and enhanced engagement. In a stand-out achievement, over one million customers have joined the Bank through our ‘Hayyak’ onboarding app since its launch in 2019. Retail customer transactions have more than doubled over the last three years in line with the Bank’s growth, and in 2023 self-service transactions represented 97% of the total. Meanwhile, ADCB’s Private Banking business has launched a new wealth platform to serve a customer base that grew 34% during the year.
The Corporate and Investment Banking Group has thrived across its full-service offering. The Bank extended AED 74 billion of new corporate credit in 2023 to diverse sectors. The continued de-risking of the loan portfolio resulted in government-related entities (GREs) accounting for 25% of gross loans as at December-end, up from 23% a year earlier, while exposure to real estate investment decreased to 17% from 22%. Meanwhile, ADCB’s enhanced capabilities in equity capital markets, as well as its continued leadership position in debt capital markets and loan syndication drove fee income higher.
ADCB is proud to be establishing a strategic presence in Saudi Arabia, leveraging its strong balance sheet and sophisticated capabilities to support a growing client base. Having received approval in mid-January 2024 from the Kingdom’s Council of Ministers, the Bank plans to open a branch in Riyadh to support corporate and institutional clients that are operating in the increasingly vibrant Saudi economy.
Our major subsidiaries also continue to perform well. Al Hilal Bank’s super app is gaining strong momentum, with 130,000 new banking customers joining in 2023. ADCB Egypt reported a 126% rise in net profit to EGP 1.8 billion, a return on equity of 23.8%, demonstrating significant resilience and a capacity to adapt in the face of a challenging macro-economic environment.
In line with our strategy to focus on core businesses, ADCB unlocked significant shareholder value through the divestment of an 80% stake in Abu Dhabi Commercial Properties (ADCP) in the fourth quarter, booking a net gain of AED 490 million including fair value gain on 20% retained interest.
Looking ahead, we view alignment with the national priorities of Emiratisation and sustainability as opportunities to serve our communities and to enhance the fundamentals of our business. In 2023, we welcomed more than 300 UAE nationals to the Bank, including to key senior positions, taking the total number of Emirati employees to over 2,000. This represents 40% of the Group’s employee base in the UAE, among the highest rates in the financial sector.
The Bank’s prioritisation of sustainability and implementation of best practice have been recognized by independent ESG ratings agencies. A significant upgrade from Sustainalytics now ranks ADCB as the top bank in the MENA region and in the leading 6% of all companies covered globally. In the area of climate, ADCB demonstrated strong leadership by joining the UN-convened global Net Zero Banking Alliance (NZBA) in November 2023, while tripling its sustainable finance commitment to AED 125 billion by 2030.
Having accelerated implementation of its strategy, ADCB is now setting its ambition higher, adopting new five-year targets designed to increase market share further. The Bank benefits from a robust financial position, as well as a track record of innovation and strong organisational culture, giving us the confidence to press ahead to create significant shareholder value.”
