ADCB posts 20% rise in quarterly net profit, beats forecasts

Abu Dhabi Commercial Bank (ADCB), the third-largest bank by assets in the UAE, has announced a 20 per cent growth in its second-quarter profit, exceeding analysts’ expectations.

The bank’s net profit attributable to shareholders reached Dhs2.32bn($631.65m) for the three months ending June 30, up from Dhs1.93bn, a year earlier. This result outperformed the Dhs2.05bn forecasted by six analysts polled by Reuters.

ADCB’s Q2 earnings

In its Q2 2024 financial results, ADCB reported significant growth driven by increased net interest and non-interest income, reported state news agency WAM.

The bank’s pre-tax net profit for the second quarter rose by 30 per cent year-on-year to Dhs2.593bn, while the first half of 2024 saw a 28 per cent increase to Dhs5.023bn. Post-tax net profit for the first half was Dhs4.456bn, with the second quarter alone contributing Dhs2.317bn, representing returns on average tangible equity of 15.0 per cent and 16.5 per cent respectively.

ADCB’s balance sheet remains robust, supported by healthy capital ratios, with the capital adequacy and CET1 ratios strengthening to 16.43 per cent and 13.17 per cent respectively, as per the report.

UAE economy

ADCB’s robust performance is underpinned by strong UAE economic fundamentals and a strategic focus on accelerated growth, as per its official statement. The bank recorded operating income of over Dhs9bn for the first half of the year, achieving double-digit year-on-year growth in both net interest and non-interest income.

The diversification of revenue streams was enhanced by rising fee income, driven by deep customer relationships and a sophisticated product offering.

The bank has surpassed the milestone of Dhs600bn in total assets, expanding at a 14 per cent compounded annual growth rate (CAGR) over the past three years. ADCB also reported Dhs30bn in net loan growth in the first half of the year, with increased exposure to high-quality credits.

As a result, credit risk-weighted assets grew by only Dhs6bn in the first six months of 2024.

ADCB’s strategy to rebalance its lending portfolio has resulted in an increase in loans to government-related entities (GREs) to 27 per cent of total loans, while exposure to real estate investment has reduced significantly.

The bank’s risk-adjusted net interest margin improved to 2.11 per cent in the first half, supported by a 15 basis point improvement in cost of risk to 0.58 per cent.

Customer deposits grew to Dhs390bn by the end of June, with current and savings account (CASA) deposits accounting for 44 per cent of total deposits.

Outlook

Given the strong loan growth achieved year-to-date and a healthy credit pipeline, ADCB has revised its full-year 2024 loan growth guidance to approximately 15 per cent, up from the previous range of 8 per cent to 10 per cent.

The banking group said it continues to leverage digital platforms for expansion, achieving a new monthly record of 44,000 new customer registrations in May.

Digital engagement has also increased, with internet and mobile banking subscribers up 34 per cent year-on-year. The bank has seen substantial growth in personal loans, auto loans, and mortgages, and issued over 64,000 new cards in Q2 2024 through digital onboarding and ecosystem partnerships.

Looking forward, ADCB remains focused on customer experience excellence to expand its market share.

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