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ADCB returns to profit on strong interest earnings

26 January 2011

ABU DHABI— Abu Dhabi Commercial Bank, or ADCB, returned to profit in 2010 and earned Dh391 million due to higher net interest income.

The bank, which booked a net loss of Dh513 million in 2009, also reported Dh371 million net profit in fourth quarter of 2010 compared to a net loss of Dh1.213 billion in the same quarter last year, the bank said in a statement on Tuesday.

The Abu Dhabi’s second largest lender by assets last year took impairments provisions of Dh3.287 billion of which Dh2.860 billion were related to loans and advances and the rest for funded and unfunded investment securities.

“The bank managed to clean most of its bad assets,” said Tariq Qaqish, director and fund manager at Al Mal Capital PSC in Dubai.

“If credit growth is back to the market we will see ADCB back to the game,” he said.

Eissa Al Suwaidi, Chairman of ADCB said: “Bank continues to have a strong franchise and delivered a robust performance in 2010, despite a continued challenging credit environment.”

The NPL ratio of the bank was 5.8 per cent marginally higher than 5.2 per cent as at December 31, 2009 and provision coverage ratio was at 69.6 per cent at the end of the period against 67.8 per cent in a year ago. Including the exposure to Dubai World, the NPL ratio stood at 11.1 per cent and provision coverage at 44.1 per cent.

The growth in total operating income was mainly attributed to stronger contribution of net interest income which recorded an increase of 12 per cent year on year reaching Dh3.682 billion and Dh1.034 billion for the fourth quarter.

Net interest margin increased by 6 bps to 2.57 per cent in 2010. NIM for the fourth quarter of 2010 was 2.79 per cent.

ADCB reported a 10 per cent year-on-year increase in non-interest income for the full year to Dh1.654 billion.

“Fees and commission for the year were three per cent lower and loss from the decrease in fair value of investment property totaled Dh116 million, which was offset by higher revenues in trading and improved contribution from profit from associates,” the bank said.

Net gain on trading and derivative income grew over 100 per cent in 2010 to Dh313 million.

Income from RHB Capital Berhad grew 59 per cent to Dh340 million in 2010, the bank said in a statement.

Customer deposits rose 23 per cent year on year to Dh106 billion.

Ala’a Eraiqat, Chief Executive Officer said: “We enter 2011 with a clear vision, strategy and healthy capitalisation”.

He said the his bank has “emerged from 2010 with improved business lines, and strengthened partnerships across its operations, and is well positioned and committed for continued success in the year ahead.”

The chief executive described 2010 as “a year of measured growth.”

The acquisition of the UAE retail banking, wealth management and SME businesses of The Royal Bank of Scotland PLC, he said has resulted in substantial growth of “our strategically important consumer banking business.”



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