Abu Dhabi Islamic Bank, the biggest Sharia-compliant lender in the emirate, is bullish about double-digit profit growth in 2022 on the back of interest rate hikes, after it posted an 18 per cent surge in first-quarter net profit.
Interest rate hikes are expected to significantly boost the bottom line this year, Mohamed Abdelbary, ADIB’s group chief financial officer, told The National.
"We have a lot of tailwind going into 2022," he said.
Net profit for the three-month period to the end of March rose to Dh715 million ($194.8m) from a year earlier, ADIB said in statement on Wednesday to the Abu Dhabi Securities Exchange, where its shares are traded.
Revenue in the first quarter climbed 6 per cent to Dh1.41 billion from a year earlier, driven by a 12 per cent annual increase in non-funded income to Dh620m and a 1 per cent growth in funded income to Dh789m.
Provisions for bad loans declined 15 per cent to Dh113m, reflecting an overall improvement in economic conditions. The lender also improved the provision coverage of non-performing financing, including collaterals, by 9.2 percentage points to more than 121 per cent.
“We are very happy with the outcome of our performance … I think the most encouraging part is that we managed to [increase profit] by growing our revenues by 6 per cent and reducing costs by 2 per cent. And the benefits from impairments is only 15 per cent," Mr Abdelbary said.
“Accordingly, it's really a good story to have in terms of underlying growth.”
The UAE economy bounced back strongly from the Covid-driven slowdown last year and has continued momentum into this year despite global geopolitical headwinds and pandemic-related uncertainties. The Arab world’s second-largest economy introduced fiscal and monetary stimuluses worth Dh388bn that supported the economic rebound.
The economic stimulus includes the Dh50bn Targeted Economic Support Scheme (Tess) launched by the Central Bank of the UAE to boost liquidity in the banking and financial sector, parts of which have been extended to mid-2022.
The country's economy grew 3.8 per cent last year, beating the World Bank's forecast of 2.1 per cent, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said earlier this month.
The UAE's economic output is expected to grow 4.9 per cent in 2022, according to Japan's largest lender MUFG, while Emirates NBD forecasts growth of 5.7 per cent and Abu Dhabi Commercial Bank estimates a 5.4 per cent expansion, supported by a sharp rise in the oil sector.
Referencing the 4.2 per cent GDP growth for 2022 estimated by the Central Bank of the UAE and the International Monetary Fund, Mr Abdelbary said sectors such as real estate are recording strong momentum, which, in turn, is expected to boost home and personal financing.
ADIB’s total assets increased 6 per cent year on year to Dh139bn, driven by a 9 per cent jump in gross financing to Dh95bn.
The 25 basis points increase in base interest rates by the UAE central bank in March, in line with the Fed, has not yet had an effect on lending, he said.
However, with anywhere between seven and nine interest rate hikes expected in 2022 and 2023, including one by the Fed next week, borrowing is likely to tighten.
“There is demand and financing will happen, but as rates also go up, you will start seeing that some clients may be [holding] back from availing financing. It's early days for that, but our expectation is that the [lending] market is probably going to grow anywhere between 5 per cent and 7 per cent this year," Mr Abdelbary said.
Calling the rate increases a "double-edged sword", he also confirmed that for every 50bps increase, ADIB will benefit Dh120m in terms of profitability.
"We are benefiting slightly more than ... our competition because our cost of funds is fairly efficient and only 30 basis points. So as rates go up, we do not pay more on funding the balance sheet," he said.
In terms of provisioning, the cost of risk for the bank is anticipated to average 70bps to 80bps this year, compared with 40bps in the first quarter.
“The reason is that clearly the market is opening up and we are on an upward trajectory. We see a lot of business momentum and we are also exploring different avenues and with that comes more risk. The normalised level for us is probably between 70 to 80 basis points," Mr Abdelbary said.
Customer deposits during the first three months of the year grew 8 per cent annually to Dh111bn. The lender maintained a robust capital position with a common equity tier 1 ratio of 12.7 per cent and total capital adequacy ratio of 18.1 per cent.
The lender also remains focused on cost discipline that led to a 2 per cent annual drop in operating expenses to Dh577m. The bank’s cost-to-income ratio improved 3.4 percentage points to 40.9 per cent.
The reduction in costs was mainly supported by the bank's digitalisation efforts, Mr Abdelbary said.
"Our digital strategy is really paying off. We have made significant investment in our digital platforms over the last two years. When you do these investments, you're able to create efficiencies without impacting your operations or even customer experience."
Mr Abdelbary also confirmed that the bank is on track to launch its new asset management business in the first half of this year.
The pandemic is still the main concern this year for the finance executive.
"We don't want to see a repeat of the Covid-19 situation, because these are external factors which can really derail the recovery of the economy. I'm happy to see what we call the U-shaped recovery ... and we don't want anything to come and disturb that angle.
"I'm very optimistic about 2022. But I'm also cautious that we don't want a repeat of a similar situation where it becomes a global phenomena," he said.
FIGHT INFO
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Men’s 71kg Round 1:
Seyed Kaveh Soleyman (IRI) beat Abedel Rahman (JOR) - RSC round 3.
Amine Al Moatassime (UAE) walk over Ritiz Puri (NEP)
Naga
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Springsteen: Deliver Me from Nowhere
Director: Scott Cooper
Starring: Jeremy Allen White, Odessa Young, Jeremy Strong
Rating: 4/5
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Company profile
Date started: January, 2014
Founders: Mike Dawson, Varuna Singh, and Benita Rowe
Based: Dubai
Sector: Education technology
Size: Five employees
Investment: $100,000 from the ExpoLive Innovation Grant programme in 2018 and an initial $30,000 pre-seed investment from the Turn8 Accelerator in 2014. Most of the projects are government funded.
Partners/incubators: Turn8 Accelerator; In5 Innovation Centre; Expo Live Innovation Impact Grant Programme; Dubai Future Accelerators; FHI 360; VSO and Consult and Coach for a Cause (C3)
Ms Yang's top tips for parents new to the UAE
- Join parent networks
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The President's Cake
Director: Hasan Hadi
Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem
Rating: 4/5
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Series info
Test series schedule 1st Test, Abu Dhabi: Sri Lanka won by 21 runs; 2nd Test, Dubai: Play starts at 2pm, Friday-Tuesday
ODI series schedule 1st ODI, Dubai: October 13; 2nd ODI, Abu Dhabi: October 16; 3rd ODI, Abu Dhabi: October 18; 4th ODI, Sharjah: October 20; 5th ODI, Sharjah: October 23
T20 series schedule 1st T20, Abu Dhabi: October 26; 2nd T20, Abu Dhabi: October 27; 3rd T20, Lahore: October 29
Tickets Available at www.q-tickets.com
Stat Fourteen Fourteen of the past 15 Test matches in the UAE have been decided on the final day. Both of the previous two Tests at Dubai International Stadium have been settled in the last session. Pakistan won with less than an hour to go against West Indies last year. Against England in 2015, there were just three balls left.
Key battle - Azhar Ali v Rangana Herath Herath may not quite be as flash as Muttiah Muralitharan, his former spin-twin who ended his career by taking his 800th wicket with his final delivery in Tests. He still has a decent sense of an ending, though. He won the Abu Dhabi match for his side with 11 wickets, the last of which was his 400th in Tests. It was not the first time he has owned Pakistan, either. A quarter of all his Test victims have been Pakistani. If Pakistan are going to avoid a first ever series defeat in the UAE, Azhar, their senior batsman, needs to stand up and show the way to blunt Herath.
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yallacompare profile
Date of launch: 2014
Founder: Jon Richards, founder and chief executive; Samer Chebab, co-founder and chief operating officer, and Jonathan Rawlings, co-founder and chief financial officer
Based: Media City, Dubai
Sector: Financial services
Size: 120 employees
Investors: 2014: $500,000 in a seed round led by Mulverhill Associates; 2015: $3m in Series A funding led by STC Ventures (managed by Iris Capital), Wamda and Dubai Silicon Oasis Authority; 2019: $8m in Series B funding with the same investors as Series A along with Precinct Partners, Saned and Argo Ventures (the VC arm of multinational insurer Argo Group)
The biog
Marital status: Separated with two young daughters
Education: Master's degree from American Univeristy of Cairo
Favourite book: That Is How They Defeat Despair by Salwa Aladian
Favourite Motto: Their happiness is your happiness
Goal: For Nefsy to become his legacy long after he is gon
Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
