ADCB plans to double net profit in five years

Abu Dhabi Commercial Bank (ADCB) on Monday announced a new growth strategy, which aims to double net profit to Dh20 billion within the next five years, while aiming to achieve an annual growth rate of circa 20 per cent.

The bank also aims to increasing year-on-year paid-out dividends over the same period, to approximately Dh25 billion over the next five-years, up 50 per cent compared to the total dividend payout in the preceding five-year period. ADCB will target delivering annual return on equity exceeding 15 per cent each year, while maintaining healthy regulatory ratios and an adequate capital position to fuel future growth.

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The new strategy was announced as the bank reported profit before tax of Dh10.585 billion for FY'24, up 26 per cent and Dh2.884 billion in Q4'24, up 15 per cent year on year.

Net profit after tax rose 15 per cent to Dh9.419 billion in FY'24, and Dh2.573 billion in Q4'24, up 5 per cent year on year. The bank recommended a dividend of Dh0.59 per share, representing a total payout of Dh4.319 billion and equivalent to 46 per cent of net profit.

For the full year, ADCB's net interest income increased seven per cent to Dh13.226 billion, while non-interest income increased 39 per cent to Dh6.254 billion. Operating income of Dh19.480 billion increased 15 per cent, while cost to income ratio improved by 130 basis points to 31 per cent.

Operating profit increased 18 per cent to Dh13.448 billion before impairment charges.

For the fourth quarter, profit before tax increased 15 per cent to Dh2.884 billion. Net profit after tax stood at Dh2.573 billion. Net interest income increased three per cent to Dh3.505 billion.

Non-interest income gained 57 per cent to Dh1.962 billion, with net fees and commission income up 25 per cent. Operating income increased 17 per cent to Dh5.467 billion.

ADCB's total assets increased 15 per cent year on year and 2 per cent quarter on quarter to Dh653 billion. Net loans of Dh351 billion were up 16 per cent (Dh49 billion) year on year and 2 per cent (Dh7 billion) quarter on quarter, with a CAGR of 10 per cent since 2020.

New credit extended totalled Dh112 billion in FY'24, with Dh61 billion of repayments. Total customer deposits of Dh421 billion increased 16 per cent (Dh58 billion) year on year and 4 per cent (Dh14 billion) quarter on quarter, with a CAGR of 14 per cent since 2020.

Current and savings account (CASA) deposits stood at Dh186 billion at December-end, following a significant increase of Dh16.45 billion (10 per cent) during Q4'24 to account for 44 per cent of total customer deposits versus 42 per cent at the end of Q3'24

Cost of risk improved to 0.58 per cent in FY'24 from 0.79 per cent in FY'23.

The non-performing loan ratio improved to 3.04 per cent, the lowest level over the last five years, and reduced from 3.73 per cent at the end of 2023. Provision coverage ratio was 110.0 per cent and, when including collateral, was 188 per cent, their highest levels in the last five years

“Having created substantial shareholder value over the past five years, the Bank remains committed to delivering operational excellence to lead the next phase of growth and transformation in the UAE banking sector. A new Board-endorsed strategy sets a clear path for significant expansion of the core businesses, while leveraging the Group's capabilities and networks. ADCB will continue to invest significantly in talent and technology to increase productivity and enhance customer experience,” said Khaldoon Khalifa Al Mubarak, Chairman of ADCB.

Ala'a Eraiqat, ADCB's Group Chief Executive Officer, said: “ADCB's strong market position has driven significant balance sheet expansion, with assets increasing 59 per cent since the end of 2020 to surpass the Dh650 billion milestone. Our strong franchise has driven a 67 per cent increase in deposits over this period, and even amid higher interest rates, the bank attracted Dh18.5 billion of current and savings accounts (CASA) deposits in 2024, contributing to a favourable cost of funds. The UAE's economy is underpinned by strong fundamentals, driven by a pro-business policy agenda to promote diversification, sustainable development and cross-border investment. As a leading financial institution, ADCB is at the heart of this progress, committed to driving growth through innovative financing solutions.”

Somshankar Bandyopadhyay

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somshankar@khaleejtimes.com

Somshankar Bandyopadhyay is a News Editor with close to three decades of experience. Currently, he manages the business section, ensuring that the top economic and business news of the day reaches its readers.