Abu Dhabi Islamic Bank records 52% decrease in net profit for H1 2020

Abu Dhabi Islamic Bank (ADIB) has reported a net profit of Dhs587.6m for H1 2020, down 52 per cent year-on-year.

It also said that its net revenue declined nearly 11.5 per cent year-on-year from Dhs2.88bn in H1 2019 to Dhs2.55bn in the first half of this year.

Mohamed Abdelbary, group chief financial officer attributed the decrease in net profits to lower economic activity, lower rates and a higher cost of credit. “Despite the low rate environment, ADIB was able to maintain one of the highest net profit margins in the market of 3.6 per cent in H1 2020. This was helped by the positive impact of a low cost of funds, supported by higher CASA balances which comprised 76 per cent of our total customer deposits,” said Abdelbary.

In a statement to the Abu Dhabi stock exchange, the bank revealed that credit provisions and impairment for H1 2020 also increased significantly by 105.4 per cent to Dhs708.6m from Dhs345m in H1 2019.

“We have supported our customers through the deferral of finance repayments, while waiving certain fees to help individuals and businesses manage the difficulties they may be facing,” said ADIB’s chairman, Jawaan Awaidah Al Khaili, who noted that the measures were in line with the Central Bank’s Targeted Economic Support Scheme.

“Our levels of capital and liquidity continue to remain strong, with both our common equity Tier-1 ratio and advances to deposits ratio increasing from the end of the previous quarter,” added Al Khaili who also revealed that 60 per cent of all its customers are now banking digitally.

The bank’s operating expenses decreased 4 per cent year-on-year to Dhs1.25bn in H1 2020.

CASA deposits also rose 4.2 per cent to Dhs74.6bn, comprising 75.6 per cent of the Dhs98.6bn total consumer deposits.

In July, the bank announced exclusive offers for healthcare professionals in the country including a reduction on the profit rate and pricing discounts on some of the bank’s financial products.

Read: Abu Dhabi Islamic bank provides exclusive offers to healthcare workers

“We are already seeing a resurgence in business volumes, as demonstrated in ADIB’s 4 per cent growth in customer financing, and believe that this trend would continue as the recovery gathers pace in the second half of the year,” said Al Khaili.

“In response to heightened interest from international investors in ADIB’s stock, the bank raised the percentage of foreign ownership to 40 per cent from 25 per cent, which will accelerate efforts to broaden and diversify the bank’s investor base at a critical time.”

In May, the bank’s CEO Mazin Manna resigned, just over a year into his role and was replaced by Sandeep Chouhan who was appointed as acting CEO.

Read more: Abu Dhabi Islamic Bank CEO Manna resigns after a year on job