Abu Dhabi Commercial Bank reports Dhs1.121bn in Q1 net profit, up 436 per cent y-on-y

The Abu Dhabi Commercial Bank reported Q1 2021 net profit of Dhs1.121bn, a growth of 436 per cent year on year and 11 per cent sequentially.

The bank said that its the net interest income of Dhs2.119bn was 10 per cent lower sequentially and 24 per cent lower year-on-year “mainly on account of the low interest rate environment and subdued macro-economic conditions.”

It was partially offset by higher non-interest income of Dhs802m, which was up 14 per cent sequentially and 17 per cent year-on-year.

Operating expenses of Dhs1.061bn decreased 20 per cent year-on-year and 1 per cent sequentially. Cost to income ratio of 36.3 per cent in Q1 2021 improved 180 basis points from a year earlier.

ADCB said in a statement that it is “firmly on track to exceed its Dhs1bn cost synergy target for 2021, having captured cost synergies of Dhs917m in 2020.”

Net impairment charges at the bank were Dhs704m in the first quarter of this year, a decrease of 25 per cent sequentially and 63 per cent lower year-on-year.

Total customer deposits decreased 5 per cent quarter-on-quarter to Dhs239bn at the end of Q1 2021, with the average deposit balance being Dhs246bn during the quarter.

The bank added that net loans decreased 1 per cent quarter on quarter to Dhs236bn as on March 31, 2021, “resulting primarily from corporate repayments in the real estate sector as well as significant provisioning levels.” The average loan balance was Dhs233bn during the quarter.

The bank’s active engagement with customers who have benefitted from TESS and other deferrals has resulted in repayments of Dhs6.716bn.

Earlier this month, the Central Bank of the UAE said that it would extend its economic support programme launched in response to the coronavirus pandemic until the middle of next year. Financial institutions will continue to be able to tap a collateralized Dhs50bn ($13.6bn) zero-cost liquidity facility until June 30 next year.

Read: UAE Central Bank extends economic-support programme until mid-2022

With regards to its exposure to NMC Health Group (NMC), the bank said that following NMC entering into administration in 2020, the bank worked closely with the joint administrators and other creditors to approve and implement a restructuring plan.

ADCB, together with a syndicate of lenders, participated in a $325m Administration Funding Facility (AFF) to ensure operational continuity of NMC and to pave the way for restructuring.

In March, ADCB has recommended a cash dividend of Dhs0.27 per share, translating to a pay-out of Dhs1.878bn, or 49 per cent of the net profit for 2020. Total shareholders’ equity stood at Dhs56bn as of March 31, 2021.

Read: Abu Dhabi Commercial Bank recommends Dhs1.878bn in cash dividends for 2020