ADCB’s Q1 2023 profit surges to $509m on higher net interest

UAE’s Abu Dhabi Commercial Bank (ADCB) said its quarterly net profit soared by 27 per cent, despite the heightened uncertainty in the global economy and international banking sector.

ADCB reported a net profit of $509.1m (Dhs1.88bn) in the three months ended March 31, from Dhs1.48bn for the same period a year earlier. The bank’s net interest income rose by 33 per cent settling at Dhs2.85bn while non-interest income surged by 34 per cent to reach Dhs1.06bn.

The Abu Dhabi-based lender’s operating profit before impairment charges increased by 47 per cent to Dhs2.68bn while its operating income soared to Dhs3.9bn, a 33 per cent increase from the same period in 2022.

“Our first quarter performance demonstrates that ADCB continues to be a highly trusted partner in the UAE economy, supported by our sharp focus on customer service excellence. The bank benefits from a strong financial position and remains on a positive growth trajectory,” Ala’a Eraiqat, Group CEO of ADCB.

ADCB’s total assets edged up to Dhs501bn in the quarter, up 13 per cent from Dhs445bn for the same period a year earlier, driven by continued loan and deposit growth. The bank said net loans and advances jumped 7 per cent in Q1 2023 to Dhs264bn compared to the first quarter of 2022 and customer deposits surged by 19 per cent to Dhs311bn.

ADCB reports record net profit of AED 1.878 bn in Q1’23, up 27% YoY. Learn more on https://t.co/XU7pfI4TmE pic.twitter.com/usID11rkbo

— ADCB بنك أبوظبي التجاري (@OfficialADCB) April 17, 2023

The banking group said it disbursed Dhs20bn in new credit facilities during the first quarter of the year and customer deposits in current and savings accounts amounted to Dhs158bn – accounting for 51 per cent of total customer deposits.

The Abu Dhabi-based lender registered 114,000 new retail customers, with 80 per cent joining through digital channels. Its cards business, personal and auto loans and mortgages reported combined asset growth of 11 per cent year-on-year.

ADCB Group’s growth strategy

Meanwhile, the bank is significantly investing in digital channels through several partnerships to enhance customer experience. ADCB and Al Hilal Bank partnered with digital bank Nomo, part of Bank of London and the Middle East to allow UAE residents to open UK-based Shariah-compliant multicurrency current and savings accounts. The accounts also give UAE residents access to UK home financing through dedicated mobile applications.

Read: ADCB joins ‘Buna’ system to enhance regional cross-border payments

Earlier in April, the banking group said it was not in talks with funds to sell Dhs13.5bn of non-performing loans (NPLs) amid reports that the UAE lender was weighing a possible offer to clean up its books.

“ADCB denies in the strongest terms that it is in ongoing deliberations with the company named in the report related to the sale of non-performing loans. The bank has no intention of pursuing a transaction or any business partnership with the named party,” the bank said in a bourse filing.

However, the lender sold a $1.1bn loan portfolio to US investment fund Davidson Kempner in January as part of a strategy by Abu Dhabi’s second-largest bank to declutter its balance sheet straddled with high-profile corporate defaults.

The following month Grant Thornton and its Asset Recovery Fund purchased $357m in distressed NPLs from ADCB, marking the first time the UAE lender offloaded distressed debt of that magnitude. Grant Thornton said in February that the sale signals “how local banks in the UAE are cleaning up their books to support the growing market while remaining compliant with international regulatory and banking standards.”

Read: ADCB denies report of talks to sell $3.7bn of bad loans