ABU DHABI/November 3-2020: Abu Dhabi Islamic Bank (ADIB), the second largest Islamic bank in the UAE, reported a net profit of AED1.12 billion and net revenue of AED3.93 billion for the first nine months of 2020, down by 40 per cent compared with AED1.85 billion recorded by the bank a year ago.
The bank also delivered solid financial performance in the third quarter supported by a rebound in economic activity and positive client sentiment despite an unprecedented global backdrop arising from the COVID 19 pandemic.
This resulted in a net profit of AED533.8 million in third quarter (Q3), 2020, an increase of 68 per cent compared with Q2, 2020 and 98 per cent compared with Q1, 2020, driven by strong revenues and rigorous cost efficiencies.
Q3 profit down YOY
However, net profit for Q3 was down 14 per cent compared with the same period last year due to an increase in impairment charges and lower revenues, pre-dominantly driven by net profit margin compression that was partially mitigated by a cost reduction of 9 per cent.
The bank said this was achieved by successfully implementing a number of initiatives including digital initiatives that helped reduce the cost of sales and customer acquisition and by streamlining internal processes.
The cost synergies, according to ADIB, created capacity for the bank to continue investments in digital and strategic initiatives to attract new customers and support ADIB’s long-term growth.
The bank further strengthened its capital, liquidity and funding ratios with a capital adequacy ratio of 18.35 per cent, Tier 1 capital ratio of 17.25 per cent and a CET1 ratio of 12.66 per cent, all substantially above minimum regulatory requirements.
9M provisions up 73 pc
Meanwhile, provisions for the first nine months of 2020 increased by 73 per cent to AED954.1 million compared with the same period last year, reflecting on-going challenges in the macro-economic environment.
Assets growth marginal
Total assets of the bank was marginally up by 2.3 per cent year on year to AED127 billion. Net customer financing during the period increased by 5 per cent to AED83.2 billion from AED79.2 billion compared with that of September 30, 2019.
Customer deposits were at AED100.7 billion as of September 30, 2020, with CASA balances increasing by 4 per cent year on year to AED75.7 billion, comprising 75.2 per cent of total customer deposits compared with 72.5 per cent a year earlier.
Advances to stable funds ratio was 87.1 per cent as of September 30, 2020 compared with 83.9 per cent a year earlier.
A statement from ADIB said the bank’s common equity Tier 1 ratio of 12.66 per cent and capital adequacy ratio of 18.35 per cent remained well above minimum regulatory requirements as of September 30.
Jawaan Awaidah Al Khalil (seen in the picture), chairman of ADIB, said although the macro-economic environment remains uncertain, ADIB has seen positive signs of recovery resulting from the decisive actions taken by the UAE government.
“At ADIB, we have been able to deliver a solid performance for the third quarter of 2020 reflecting rebound in economic activities, which generated momentum across all business units. We have witnessed a net income growth of 68 per cent compared with the previous quarter driven by strong revenues and consistent cost discipline,” the chairman added.
Mohamed Abdelbary, group financial officer said the bank’s retail banking business, which has considered the backbone of the group, delivered a resilient performance demonstrating the bank’s market leading capabilities and strong customer base.
“This has allowed us to maintain one of the highest net profit margins in the market of 3.6 per cent for the first nine months of 2020,” he added.