Abu Dhabi Commercial Bank (ADCB), the UAE’s third-largest lender, reported a more than five-fold increase in its first-quarter profit due to lower impairments and higher non-interest income as the economy recovers from the coronavirus pandemic.
Net profit for the three months to March 31 climbed to Dh1.12 billion ($305 million), the lender said in a statement to the Abu Dhabi Securities Exchange, where its shares trade. Impairment allowances dropped 63 per cent to Dh704 million, while non-interest income rose 17 per cent to Dh802m. Operating expenses fell 20 per cent to Dh1.06bn.
“ADCB had a strong start to 2021, recording net profit ... growth of 11 per cent sequentially and significantly higher than in the first quarter of 2020, largely due to improved cost of risk," Ala'a Eraiqat, group chief executive of the bank, said.
"ADCB’s institutional strength has underpinned the resilience of our consumer and wholesale banking businesses. Merger synergies, acceleration of digital transformation and additional cost initiatives have resulted in greater efficiency across our operations."
Abu Dhabi’s economy is poised to grow by 6 per cent to 8 per cent over the next two years, driven by the oil sector, government spending, financial services and foreign direct investment.
"We remain confident that the UAE economy is progressing well on the path to recovery from the impact of the Covid-19 pandemic, driven by a robust response guided by the country’s leadership," Mr Eraiqat said.
"The UAE Central Bank’s support for the economy through [the Targeted Economic Support Scheme, or Tess], in combination with the government’s strong fiscal position and rapid roll-out of an effective vaccination programme that has reached 103 doses per 100 people in the UAE, are underpinning consumer and business confidence.”
The Central Bank of the UAE last week extended Tess, a Dh50bn zero-cost liquidity facility, until the end of June 2022 to help cushion the impact the Covid-19 pandemic on the economy.
Non-interest income increased as card-related income rose 29 per cent, net trading income increased 11 per cent on higher derivatives income and other operating income grew 76 per cent year-on-year on the back of gains made on investment securities sales.
Impairments were lower as the corresponding period a year earlier included write-downs on loans to NMC Health and Finablr.
"Considering all prevailing factors and progress in NMC’s restructuring process, the bank views existing provisioning levels to be prudent and appropriate," group chief financial officer Deepak Khullar said.
The lender's total assets stood at Dh395.8bn at the end of March, 4 per cent lower than in the same period last year as its loan book shrank by the same amount and customer deposits reduced by 9 per cent.
Company profile
Date started: December 24, 2018
Founders: Omer Gurel, chief executive and co-founder and Edebali Sener, co-founder and chief technology officer
Based: Dubai Media City
Number of employees: 42 (34 in Dubai and a tech team of eight in Ankara, Turkey)
Sector: ConsumerTech and FinTech
Cashflow: Almost $1 million a year
Funding: Series A funding of $2.5m with Series B plans for May 2020
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Engine: 2x201bhp AC Permanent-magnetic electric
Transmission: n/a
Power: 402bhp
Torque: 659Nm
Price estimate: Dh200,000
On sale: Q3 2022
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The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
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