ADCB Q1 net pre-tax increases 26% to $660 million

ADCB has continued its growth momentum into 2024, posting a pre-tax net profit of AED2.431 billion ($660 million) in the first quarter (Q1), up 26% year-on-year. Net profit after tax was AED2.139 billion, with a return on average tangible equity of 14.1%.

This strong profit growth was broad-based and was mainly due to solid lending growth in the Corporate and Investment Banking and Retail Banking activities, according to a press release from the ADCB.

The Corporate and Investment Banking Group (CIBG) continued to grow its market share in the UAE and the region. CIBG’s net loans grew 7% during the quarter and 28% year-on-year. The company is pursuing a strategy to build banking relationships in key regional economic corridors, and is making good progress with the opening of a branch in Saudi Arabia following formal approval in January 2024. CIBG achieves a market-leading fee-to-income ratio by leveraging its advanced product suite enhance and build on its strong track record in structuring complex transactions, lending syndicates and capital markets advisory activities.

Promoting the growth of SMEs

The bank’s approach to driving growth in SMEs continues to gain momentum, with the creation of more than 1,500 new banking relationships in the first quarter, powered by digital platforms that provide convenient self-service solutions.

The Retail Banking Group had another strong quarter with a quarterly record of approximately 70,000 credit cards issued. The personal loan portfolio was up 12% year-on-year, with car loans up 28% and mortgages up 26%. In the first quarter, more than 205,000 new customers joined the bank, 84% of them digitally.

With the UAE economy showing solid fundamentals amid significant domestic investment, the ADCB Group achieved net credit growth of 5% quarter-on-quarter and 21% year-on-year. The bank has further increased its exposure to government and public sector, which now accounts for 27% of total loans, up from 25% at the end of December. Meanwhile, exposure to the real estate sector has been reduced from 17% at the end of 2023 to 16%.

Inflow of deposits

ADCB’s strong franchise continues to attract significant deposit inflows. During the quarter, total customer deposits increased by 6% compared to the end of December and by 24% year-on-year. The bank attracted 152,000 new checking and savings account (CASA) customers and AED 12 billion in CASA deposits in the quarter. CASA deposits now represent 47% of total customer deposits.

The bank benefits from a robust balance sheet and is well positioned to drive further growth, with 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 AED3.301 billion in 1Q24, up 16% year-on-year on continued lending growth over several quarters in a high interest rate environment. This was also a strong quarter in terms of non-interest income, which rose 21% year-on-year to AED 1.285 billion thanks to double-digit growth in commission income and trading income.

Cost-income ratio

The cost/income ratio in the first quarter was 30.9%, an improvement of 60 basis points compared to a year earlier and 110 basis points compared to the previous quarter. The bank continues to create additional efficiencies through the application of AI and machine learning across all operations and internal controls, supporting expansion and further improving risk management.

Significant progress in sustainability also increases our long-term organizational resilience. In the coming months, we will focus on implementing our roadmap to meet Net Zero Banking Alliance (NZBA) commitments and increasing sustainable financing towards the bank’s 2030 target of AED 125 billion , and by 2025 of AED 50 billion. As part of this commitment, ADCB is rapidly expanding its eligible green loan portfolio, which has increased by 58% in six months to AED 10 billion by the end of 2023.

ADCB’s strong reputation is critical to the bank’s operational and financial performance, and to its drive to significantly increase market share. According to Brand Finance’s ‘2024 Banking 500 Report’, the value of the ADCB brand increased by 8.7% over the past year to AED 10.5 billion. The bank remains committed to investing substantially in talent and technology to maintain market-leading digital innovation and excellent service for its customers.TradeArabia News Service