ADCB reports net profit before tax of AED 5.023 bn in H1’24, up 28% and AED 2.593 bn in Q2’24, up 30% YoY

The Bank reports net profit after tax of AED 4.456 bn in H1’24 and AED 2.317 bn in Q2’24

Abu Dhabi, UAE: Abu Dhabi Commercial Bank PJSC (ADCB) today reported its financial results for the second quarter of 2024 (Q2’24).

Strong performance in H1’24 driven by double-digit YoY growth in net interest income and non-interest income in the context of robust UAE fundamentals

Key highlights – H1’24 vs. H1’23

• Net profit before tax of AED 5.023 bn increased 28%
• Net profit after tax of AED 4.456 bn
• Net interest income of AED 6.577 bn increased 14%
• Non-interest income of AED 2.723 bn increased 24%
• Operating income of AED 9.300 bn increased 17%
• Cost to income ratio of 31.7% improved by 30 basis points
• Operating profit before impairment charge of AED 6.349 bn increased 17% 

Key highlights – Q2’24 vs. Q2’23

• Net profit before tax of AED 2.593 bn increased 30%
• Net profit after tax of AED 2.317 bn
• Net interest income of AED 3.276 bn increased 12%
• Non-interest income of AED 1.438 bn increased 27%
• Operating income of AED 4.714 bn increased 16%
• Cost to income ratio of 32.6% was steady
• Operating profit before impairment charge of AED 3.180 bn increased 16%

Total assets cross the AED 600 bn mark, with net loans increasing AED 30 bn in H1’24, while deposits grew AED 27 bn year-to-date

• Total assets of AED 612 bn increased 17% YoY and 8% YTD.
• Net loans of AED 332 bn were up 22% (AED 60 bn) YoY and 10% (AED 30 bn) YTD. New credit extended totaled AED 73 bn in H1’24, with AED 41 bn of repayments.
• Total customer deposits of AED 390 bn increased 23% (AED 74 bn) YoY and 7% (AED 27 bn) YTD. CASA (current and savings account) deposits stood at AED 172 bn at June-end, up 14% (AED 21 bn) YoY and 3% (AED 4 bn) YTD and accounted for 44% of total customer deposits.
• Capital adequacy and CET1 ratios strengthened to 16.43% and 13.17% respectively from 16.22% and 12.86% as at December-end.
• Liquidity coverage ratio (LCR) stood at 129.9%, while loan to deposit (LTD) ratio was 85.2%.
• Cost of risk improved to 48 bps in Q2’24 from 71 bps in Q2’23, and to 58 bps in H1’24 from 73 bps in H1’23.
• The NPL ratio improved to 3.59% from 3.73% at December-end. Provision coverage ratio was 95% and, when including collateral, was 146%.

Commentary on Q2/H1 2024 financial results

ADCB’s ambitious strategy for accelerated growth is driving strong momentum in the Bank’s operational and financial performance. Net profit before tax increased 30% year on year to AED 2.593 billion in the second quarter, and rose 28% to AED 5.023 billion in the first half. On a post-tax basis, net profit for the first half was AED 4.456 billion and was AED 2.317 billion for the second quarter, representing a return on average tangible equity of 15.0% and 16.5% respectively.

ADCB is reinforcing its strong market position through broad-based credit growth in the context of favourable economic fundamentals in the UAE. With an operating income of over AED 9 billion for the first half, the Bank is moving at pace, recording double-digit year-on-year growth in both net interest income and noninterest income. Rising fee income is enhancing the diversification of revenue streams, driven by deep customer relationships and a sophisticated offering across all core businesses.

ADCB is playing an increasingly central role in the region’s economic dynamism, crossing the key milestone of AED 600 billion in total assets – having expanded at 14% compounded annual growth rate (CAGR) over the last three years. The Bank has recorded AED 30 billion in net loan growth in the first half of the year, driven by solid demand from corporates and individual customers. This robust growth has been marked by increased exposure to high quality credits, resulting in credit risk-weighted assets increasing by only AED 6 billion in the first six months of 2024.

Given the strong loan growth achieved year-to-date and a healthy credit pipeline, ADCB is updating its full-year 2024 loan growth guidance to approximately 15%, from the previous range of 8% to 10%.

The Retail Banking Group (RBG) continues to leverage digital platforms to expand reach. By providing seamless and immediate access to a broad range of products and services, ADCB’s onboarding app is propelling growth – hitting a new monthly record of 44,000 new customer registrations in May. As the customer base grows, digital engagement also continues to increase, with internet and mobile banking subscribers up 34% year on year. The Bank is delivering strong loan growth in Retail, with personal loans up 10% year-on-year, auto loans 19% higher and mortgages increasing 24% as at the end of June. The cards business is also going from strength to strength, with over 64,000 new cards issued in Q2’24(1), fueled by digital onboarding and ecosystem partnerships.

The Corporate and Investment Group (CIBG) is capitalising on rising levels of corporate investment as well as capital markets activity. The business continues to broaden its strong network of clients in the UAE and across the GCC, with over 3,500 new banking relationships established year-to-date.

A strong advisory offering and sophisticated product suite have ensured that ADCB’s CIBG business maintains a market-leading fee-to-income ratio.

In the second quarter, ADCB continued to grow market share through solid credit expansion, focused on high-quality credit counterparties to ensure effective capital deployment. In line with the Bank’s strategy to rebalance its lending portfolio, loans to government-related entities (GREs) have increased considerably over the last two years to 27% of total loans, from 23% in December 2022, while exposure to real estate investment has reduced significantly to 15% from 22%.

As a result, the risk-adjusted net interest margin has increased to 2.11% in the first half from 2.05% a year earlier, supported by an improvement of 15 basis points in cost of risk to 0.58%.

ADCB’s strong franchise continues to attract significant customer deposits, which reached AED 390 billion at the end of June, an increase of AED 27 billion during the first half. Despite a higher interest rate environment, current and savings account (CASA) deposits expanded by AED 21 billion over the previous year, and accounted for 44% of total deposits.

ADCB’s balance sheet remains robust, supported by healthy capital ratios, with the capital adequacy and CET1 ratios strengthening to 16.43% and 13.17%, respectively at the end of June.

The Bank continues to advance its sustainability agenda. Effective coordination across the organization is delivering solid progress on implementation of ADCB’s commitments under the Net Zero Banking Alliance, particularly the roadmap to set targets for carbon-intense sectors by May 2025. The Bank is also expanding specific initiatives, and in the second quarter, ADCB Islamic Banking partnered with MasterCard’s Priceless Planet Coalition™ and UAE’s Emirates Nature WWF on a programme to restore one hundred million trees across the globe. In the area of green products, ADCB received the ‘Digital CX Award 2024’ for its Corporate Cards Carbon Calculator.

Looking ahead, a strong focus on customer experience excellence will remain a core priority to expand market share. In the second quarter, ADCB was ranked by KPMG as the top financial institution for customer experience excellence in the UAE and second across all sectors. By leveraging its leading franchise and financial strength, ADCB is well positioned to achieve further growth and to play a central role in the UAE’s vibrant economy.