ABU DHABI: ADCB has announced its last financial performance under that name with its net profit for the first quarter of the current year (UAE follows calendar year as financial year) dropping 5 per cent to AED1.152 billion ($313.90 million), impacted by higher cost of funds, though partially offset by higher non-interest income and lower impairment charges.
Recently, ADCB had merged with Union National Bank (UNB) and subsequently acquired Al Hilal Bank as its Islamic arm, to form the third largest lender in the UAE. The merged entity will be known as ADCB and will remain listed on Abu Dhabi Securities market (ADX).
The gross interest and Islamic financing income of AED3.116 billion was up 17 per cent, whereas the net interest and Islamic financing income of AED1.707 billion was 7 per cent lower, primarily attributable to a change in the composition of the liability base over the same quarter last year and competitive pricing, partially offset by rising benchmark rates and higher volumes
The bank’s non-interest income of AED566 million was up 8 per cent. The net fees and commission income also improved by 8 per cent during the quarter to AED379 million.
Operating expenses of AED793 million were up 3 per cent, mainly attributable to ongoing investments in digital transformation initiatives and integration related expenses
The bank could curb the impairment allowances at AED330 million, which were lower by 13 per cent compared with the same period last year.
The total assets grew 4 per cent to AED292 billion and net loans to customers during the period under review increased 2 per cent to AED169 billion over December 31, 2018
The low cost CASA (current and savings account) deposits increased by AED10 billion to AED80 billion over the year end, 2018 and comprised 43.3 per cent of total customer deposits compared with 39.4 per cent as at December 31, 2018
The loan to deposit ratio improved to 91.7 per cent from 94.2 per cent as of December 31, 2018.
The bank said in a statement that following the merger, the bank’s operations, processes and infrastructure will be integrated in phases over the next 18 to 24 months. The combination is expected to deliver annual cost synergies of approximately AED615 million.
Commenting on the bank’s performance Ala’a Eraiqat (seen in the picture), Group Chief Executive Officer (CEO) and board member, said the bank has made good progress in a number of key areas in the first quarter of 2019. “In particular, we have delivered a strong and sustainable return on equity, increased fee income and continued to grow our market share in deposits,” he added.
Looking ahead to the future of the bank, he said, the bank’s priorities are to maintain the highest standards of customer service throughout the integration, while delivering cost synergies and sustainable long-term growth.