Abu Dhabi Commercial Bank, the UAE’s third-largest lender, delivered a 'resilient' performance amid testing times and its long-term growth fundamentals remain solid, executives said, as the bank reported a 4 per cent drop in the fourth quarter net income.
Profit for the three months to the end of December 31, declined to Dh1.01 billion ($275.2 million), the bank said in a statement to the Abu Dhabi Securities Exchange, where its shares trade.
The results was inline with Egyptian investment bank EFG Hermes' estimates as "higher revenue and lower opex [operating expenses] compensated for higher-than-expected provisioning".
Quarterly net income fell primarily on account of higher impairment charges, climbing 3 per cent to Dh938m. Operating income for the period dropped 7 per cent to Dh3.06bn.
"At a time when stable and powerful institutions are needed to support our businesses through unpredictable challenges, I am pleased to report that ADCB remained resilient during a challenging year," Ala'a Eraiqat, the lender's group chief executive, said.
“In testing times, ADCB has drawn on its strengths – a robust balance sheet, disciplined governance and a high-performance culture – to navigate the complex issues raised by the global pandemic, softening global economic activity and low oil prices,” Khaldoon Al Mubarak, chairman of the ADCB board, said.
The lender, which has embarked on a five-year strategy, has a commitment to governance that has helped it through successive market cycles, Mr Al Mubarak added.
“As the UAE takes prudent measures to establish a solid platform for a broad recovery, ADCB is in a strong position to play a key role in delivering the country’s economic ambitions in the coming years.”
Lenders globally are facing headwinds as operating conditions deteriorate and provisions for bad loans rise amid an increase in defaults. Profit margins are under pressure as interest rates remain low amid the pandemic-induced economic slowdown.
The lender on Sunday also reported full year profit of 3.81bn, down 27 per cent from Dh5.24bn in 2019. Impairment charges for NMC Health Group, financial services firm Finablr and its associated companies, as part of the bank’s “prudent approach to provisioning”, weighed down its bottom line.
Impairment allowances climbed to Dh3.99bn at the end of last year, rising from Dh2.66bn reported for 2019. Full-year operating profit before impairment allowances held steady at Dh7.95bn despite macroeconomic challenges.
The lender, which completed its three-way merger with Union National Bank and Al Hilal Bank last April, said total integration costs incurred – excluding capital expenditure – reached Dh545m, “well below the budgeted Dh980m”. It recorded integration-related expenses of Dh153m in 2020, after reversing Dh74m of charges in the fourth quarter of last year.
The lender said it also adjusted its operating model to account for “changing customer demand and behaviour”, with strong penetration of digital banking services. It reduced its branch network to pre-merger levels of 54 locations in the UAE, from 73 branches in the second quarter of 2020, and from a peak of 127 when it merged with UNB in May 2019.
“We also continued to capture significant merger efficiencies, upgrading our final run-rate synergy target to Dh1bn from the original aim of Dh615m, while introducing additional cost optimisation measures,” Mr Eraiqat said.
“As a result, operating expenses excluding integration costs decreased by 11 per cent in 2020 and the cost-to-income ratio improved by 190 basis points to 35.1 per cent.”
On Monday, the lender appointed Sheikh Zayed Bin Suroor Al Nahyan to the board, replacing Abdulla Al Mutawa, who resigned after 24 years as an ADCB board member.
During his tenure at the bank, Mr Al Mutawa has "contributed significantly to the development of ADCB into a top-tier banking group", Mr Al Mubarak said.
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More than 2.2 million Indian tourists arrived in UAE in 2023
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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Killing of Qassem Suleimani
UAE currency: the story behind the money in your pockets
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Safety 'top priority' for rival hyperloop company
The chief operating officer of Hyperloop Transportation Technologies, Andres de Leon, said his company's hyperloop technology is “ready” and safe.
He said the company prioritised safety throughout its development and, last year, Munich Re, one of the world's largest reinsurance companies, announced it was ready to insure their technology.
“Our levitation, propulsion, and vacuum technology have all been developed [...] over several decades and have been deployed and tested at full scale,” he said in a statement to The National.
“Only once the system has been certified and approved will it move people,” he said.
HyperloopTT has begun designing and engineering processes for its Abu Dhabi projects and hopes to break ground soon.
With no delivery date yet announced, Mr de Leon said timelines had to be considered carefully, as government approval, permits, and regulations could create necessary delays.
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HOW TO WATCH
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RedCrow Intelligence Company Profile
Started: 2016
Founders: Hussein Nasser Eddin, Laila Akel, Tayeb Akel
Based: Ramallah, Palestine
Sector: Technology, Security
# of staff: 13
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Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
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Courtesy: Carol Glynn, founder of Conscious Finance Coaching
The Travel Diaries of Albert Einstein The Far East, Palestine, and Spain, 1922 – 1923
Editor Ze’ev Rosenkranz
Princeton
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