Impairments, credit provisions more than double
ABU DHABI: Abu Dhabi Islamic Bank, a leading Islamic bank in the region, has reported a net profit of AED587.6 million for the first half of 2020 compared with AED1.231 billion a year earlier, representing a 52 per cent decline.
Credit provisions and impairments for H1 2020 increased by 105.4 per cent to AED708.6 million from AED345 million in H1 2019, denting the profitability this time.
The bank has logged AED2.5 billion in net revenue for the first half of 2020. The decline in profitability, according to the bank, was predominantly driven by higher impairment charges, due to the unprecedented operating environment, as well as lower revenues, given the challenging market conditions.
However, ADIB has been able to sustain robust levels of capital with a capital adequacy ratio (CAR) of 18.18 per cent that stays well above regulatory thresholds, as well as healthy liquidity and a resilient funding profile with a credit to deposit (CD) ratio of 83.1 per cent.
ADIB said the bank continues to maintain one of the lowest costs of fund in the region supported by an efficient funding strategy and higher CASA, which enabled the bank to maintain one of the highest net profit margins in the market, at 3.6 per cent.
Total assets of the bank were at AED124.4 billion as of June 30, compared with AED125.9 billion as of December end, representing a decrease of 1.2 per cent of the period.
Jawaan Awaidah Al Khalil, chairman of ADIB, said while cost of credit and the challenging macroeconomic environment largely impacted bank’s profits in the first half of 2020, it has been able to navigate the COVID 19 reasonably well.
“Our levels of capital and liquidity continue to remain strong with both our common equity Tier 1 ratio and credit to deposits (CD) ratio increasing from the end of the previous quarter,” Al Khalil added.