ABU DHABI, (Pakistan Point News - 29th Jul, 2020) Abu Dhabi Commercial Bank PJSC (ADCB) has reported a net profit of AED1.436 billion for H2 of 2020.
In a statement Wednesday, the bank said strong operating performance despite macro-economic headwind is the main factor behind the considerable resilience displayed, adding that the significant improvement in the cost to income ratio is the result of a disciplined approach to cost management and delivery of synergies.
"Net interest and income from Islamic financing were 2 percent lower at AED5.136 billion amid a low growth environment and a contraction in the loan book on account of large corporate repayments in late June 2020. Interest expense improved by 37 percent to AED2.783 billion in H1 2020, due to a significant improvement in the cost of funds supported by increased CASA balances, reduced reserve requirements and declining benchmark rates," added the statement.
The operating profit increased 2 percent year on year to AED 4.066 billion, it added "underlining the resilience of the ADCB franchise through multiple challenges including Covid-19, lower oil prices and declining benchmark rates."
The operating expenses (including integration costs) decreased 12 percent year on year to AED2.351 billion in H1 2020, while operating expenses in Q2 2020 were down 25 percent year on year and 23 percent sequentially to AED1.025 billion.
Commenting on the financial result, Khaldoon Al Mubarak, Chairman of ADCB Group, commented, "ADCB displayed considerable resilience in a difficult operating environment in the first half of this year, as the impact of Covid-19 and low oil prices disrupted economic activity in the UAE and around the world. A robust balance sheet, as well as disciplined financial and risk management, ensured the Bank remained in a position of strength to serve the interests of its stakeholders through this challenging period.
"The bank also adapted quickly to the new circumstances in order to serve its current and future client base. Having successfully completed the fast-tracked integration of Union National Bank and Al Hilal Bank in April, ADCB became the first bank in the UAE to roll out a support package for customers and the wider community in response to Covid-19. The Bank also acted quickly to modify its operations to promote the health and safety of its customers and employees, while ensuring full continuity and service excellence.
"As the UAE takes thoughtful steps to return to normality, ADCB will continue to play an important role in supporting the country's economic recovery."
Commenting on the Bank’s performance, Ala’a Eraiqat, Group Chief Executive Officer and board Member, said, "I am pleased to report that ADCB produced a good set of financial results and a robust operating performance, especially given the operational and economic challenges raised by the Covid-19 global pandemic. Through this period, we have maintained a singular focus on delivering continuous, high-quality service to customers, at select branches and through our popular digital platforms, which have seen a sharp rise in usage over the last four months.
"In the second quarter, the Bank reported a net profit of AED1.227 billion, which translates to a strong return on average tangible equity of 13.2 percent. The underlying business has remained stable, with operating profit before impairment allowances rising 2 percent in the first half of 2020. This was predominantly driven by our sustained focus on managing the cost base, which has reduced operating expenses and helped to decrease the cost of funds.
"ADCB remains in a robust financial position, with key capital ratios improved in the second quarter and comfortably within regulatory requirements, while the Bank also supplemented its liquidity levels. The CET 1 ratio stood at 12.95 percent and the liquidity coverage ratio was at 129.1 percent as of 30 June 2020. These solid fundamentals are reflected in ADCB’s high investment-grade credit ratings."
According to the statement, ADCB continues to support the decisive measures introduced by the Central Bank of the UAE to support the country’s economy through its "Targeted Economic Support Scheme" (TESS).
"The Bank has participated fully in TESS, offering a package that includes deferment of loan instalments, reduced fees and charges, interest rate reductions and waivers, and rescheduling of working capital facilities for SMEs and corporates. As of 30 June 2020, ADCB has extended support to over 53,000 customers in the amount of AED 8.3 billion under TESS. Digital transformation programme gaining momentum, with 39 digital launches in H1 2020, triple the H1 2019 total. Increased digital penetration, with 59 percent of new ADCB retail customers on boarded digitally in the first half of 2020, compared to 35 percent in 2019. Over 71 percent of ADCB’s retail customer base is registered for digital channels and our self-service rates continue to improve, with 93 percent of retail financial transactions carried out electronically," said the statement.
