Customer financing lifts ADIB

February 5, 2019

Abu Dhabi Islamic Bank (ADIB) reported on Monday 8.7 per cent rise in 2018 net profit to Dh2.5 billion compared to Dh2.3 billion in the previous year, driven by a growth in customer financing and an improvement in provisioning.

The bank said group net revenues increased by 2.4 per cent to Dh5.769 billion compared to Dh5.632 billion in 2017.
The bank said in a statement that the performance was also supported by higher fee income, controlled operating expenses and improved funding costs.

'The bank has built a healthy balance sheet following a strengthening of capital through a rights issue and Tier-1 perpetual sukuk issuance, coupled with strong liquidity and good asset quality. This strong performance has enabled the Board of Directors to recommend a cash dividend of 27.38 per cent for 2018, which represents 39.76 per cent of 2018 net profit,' it said.

Credit provisions and impairments for 2018 decreased by 21.5 per cent to Dh620.1 million as against Dh790.4 million for 2017.Group net revenues for the final 2018 quarter increased by 13.1 per cent to Dh1.615 billion from Dh1.428 billion the same 2017 period.

Khamis Buharoon, vice-chairman and acting CEO of ADIB, said despite increased competition within the UAE banking industry, 2018 has marked another successful year for ADIB in which we have achieved solid revenue and net profit growth. 'During the year, we have enhanced our digital banking platforms and award-winning product offering, enabling us to attract over 60,000 new customers and cross the one million customer milestone. This has enhanced income sourced from customer financing, which now represents over two-thirds of total revenues.'

'Our aim is to continue to gain market share by meeting the needs and aspirations of customers, and delivering an exceptional experience across retail, wholesale and transaction banking underpinned by practical innovation and an extensive branch network,' said Buharoon.

He said a major achievement in 2018 was the strengthening of the bank's capital position through a highly successful rights issue and issuance of a Tier 1 perpetual sukuk. 'There was notable appetite from a broad range of local and international investors for these capital raising initiatives, and for the subsequent opening of ADIB's shares to foreign investors.'

'Our strong performance in 2018 has allowed ADIB's Board of Directors to recommend a cash dividend payout representing 39.76 per cent of the year's net profit, while still allowing for continued significant reinvestment in the future growth of our businesses,' said Buharoon.

The bank said total equity (including Tier 1 capital instruments) was Dh17.7 billion at 31 December 2018. This represents an increase of seven per cent year-on-year and a 3-year compounded growth rate of 5.6 per cent.
During fourth quarter 2018, ADIB raised Dh1 billion through a rights issue aimed at supporting the bank's growth strategy while boosting its common equity Tier 1 ratio, the statement said.