ADCB net profit rises 32% on higher interest income

Abu Dhabi Commercial Bank net profit soared 32 per cent in the second quarter to Dh917 million on higher interest income.

By Haseeb Haider

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Published: Wed 31 Jul 2013, 10:54 PM

Last updated: Sat 4 Apr 2015, 9:43 AM

ADCB reported record revenues and operating profit for the quarter at Dh1.991 billion and Dh1.426 billion respectively. — KT file photo

The second biggest lender by assets in Abu Dhabi reported 17 per cent increase in net profit to Dh1.820 billion in the first six months of the year.

Total operating income surged 10 per cent at Dh3.735 billion in the January-June period while in the second quarter it was seen at Dh1.991 billion.

Interest expense improved 31 per cent to Dh941 million, in the first half while non-interest income climbed 31 per cent to Dh1.016 billion.

Operating profit before impairment allowances up 13 per cent at Dh2.653 billion in the January-June period. In the second quarter operating profit was at Dh1.426 billion.

Cost to income ratio improved to 29 per cent from 30.8 per cent, in the half year ended June 30, 2013.

Net loans at Dh125.4 billion, up two per cent compared with as at 31 December 2012, while deposits rose two per cent to Dh111.4 billion.

The bank bought back 262,981,483 ordinary shares for Dh1.158 billion as at 30 June 2013. The lender further spent Dh378 million to buy back 77,620,129 ordinary shares.

Eissa Al Suwaidi, Chairman of ADCB, said: “The bank has had another profitable quarter, generating consistent and quality earnings, reporting record operating income and operating profit for the quarter.”

“We continue to remain prudent in our risk management approach, which resulted in an improved provision coverage ratio as at 30 June 2013,” he said.

The bank repaid the entire amount of Tier 2 loan of Dh6.7 billion from the Ministry of Finance in the first half of 2013 and substituted this with lower cost funding from the wholesale markets.

Ala’a Eraiqat, member of the Board and chief executive officer, said: “Over the first half of the year, we have succeeded in delivering both top and bottom line growth.” First half 2013 net profit of Dh1.820 billion represented an increase of 17 per cent year on year.

The bank reported record revenues and operating profit for the quarter at Dh1.991 billion and Dh1.426 billion respectively.

“We remain focused on improving our operational efficiency, H1’13 cost to income ratio improved to 29 per cent from 30.8 per cent in H1’12.

“Our disciplined approach to balance sheet and capital management resulted in a strengthened funding profile and lower cost of funds. Our provision coverage ratio improved significantly to 94.2 per cent from 82.2 per cent as at December 31, 2012, driven by our conservative risk management approach.”

As a result of the share buyback and improved financial performance, the Bank reported a significant improvement in return on equity at 17.4 per cent in the second quarter.

As at 30 July 2013, the bank bought back 6.1 per cent of its issued share capital equivalent to 340.6 million ordinary shares. “This success confirms the effectiveness of our strategic pillars, which have proven fundamental in supporting and implementing our business objectives,” he said.

Capital adequacy ratio at 20.96 per cent and Tier I capital at 16.35 per cent as at June 30, 2013.

— haseeb@khaleejtimes.com



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