ADCB announces Net Profit Of AED 1.227 Billion for 2nd Q of 2020

Abu Dhabi, 29 July 2020 – Abu Dhabi Commercial Bank PJSC (“ADCB” or the “Bank”) today reported its financial results[1] for the first half of 2020 (“H1’20”).

• Strong operating performance despite macro-economic headwinds. Significant improvement in the cost to income ratio resulting from a disciplined approach to cost management and delivery of synergies

Pro-forma half year comparison H1’20 vs. H1’19 (unless otherwise stated)

• Net interest and income from Islamic financing was 2% lower at AED 5.136 billion amid a low growth environment and a contraction in the loan book on account of large corporate repayments in late June’20. Interest expense[2] improved by 37% to AED 2.783 billion in H1’20 due to a significant improvement in the cost of funds supported by increased CASA balances, reduced reserve requirements and declining benchmark rates
• Operating profit[3] increased 2% year on year to AED 4.066 billion, underlining the resilience of the ADCB franchise through multiple challenges including Covid-19, lower oil prices and declining benchmark rates
• Operating expenses (including integration costs) decreased 12% year on year to AED 2.351 billion in H1’20, while operating expenses in Q2’20 were down 25% year on year and 23% sequentially to AED 1.025 billion
• Cost to income ratio (including integration costs) improved to 34.9% in Q2’20 from 42.0% a year earlier, an improvement of 710 basis points (7.1%), supported by the Bank’s on-going cost initiatives and realisation of synergies related to the combination with Union National Bank (UNB) and Al Hilal Bank (AHB)

• Total shareholders’ equity stood at AED 53 billion as at 30 June 2020, up from AED 49 billion at the end of Q1’20, driven by an increase in the net fair value of reserves on debt instruments designated under FVTOCI over Q1’20 and retained earnings for Q2’20
• Continued realisation of synergies and launch of a series of bank-wide cost initiatives to enhance efficiencies across the ADCB Group following successful completion of integration

 Successful integration of UNB and Al Hilal Bank into the ADCB Group completed in April 2020 significantly ahead of schedule and within budget. Transfer of UNB customers to ADCB achieved smoothly despite teams working remotely due to Covid-19

• Sustained commitment to supporting stakeholders in response to global Covid-19 emergency; digital capabilities enhanced in line with transformation programme.ADCB continues to support the decisive measures introduced by the Central Bank of the UAE to support the country’s economy through its “Targeted Economic Support Scheme” (TESS)

• Digital transformation programme gaining momentum, with 39 digital launches in H1’20, triple the H1’19 total
• Increased digital penetration, with 59% of new ADCB retail customers onboarded digitally in the first half of 2020, compared to 35% in 2019. 

H.E. Khaldoon Al Mubarak, Chairman of ADCB Group, commented:

“ADCB displayed considerable resilience in a difficult operating environment in the first half of this year, as the impact of Covid-19 and low oil prices disrupted economic activity in the UAE and around the world.  The bank also adapted quickly to the new circumstances in order to serve its current and future client base. Having successfully completed the fast-tracked integration of Union National Bank and Al Hilal Bank in April, ADCB became the first bank in the UAE to roll out a support package for customers and the wider community in response to Covid-19. The Bank also acted quickly to modify its operations to promote the health and safety of its customers and employees, while ensuring full continuity and service excellence.

Commenting on the Bank’s performance, Ala’a Eraiqat, Group Chief Executive Officer and Board Member said:“

I am pleased to report that ADCB produced a good set of financial results and a robust operating performance, especially given the operational and economic challenges raised by the Covid-19 global pandemic.Through this period, we have maintained a singular focus on delivering continuous, high quality service to customers, at select branches and through our popular digital platforms, which have seen a sharp rise in usage over the last four months.Impairment charges in the second quarter were significantly lower than in the first quarter of the year, when ADCB booked significant provisions for its exposure to NMC Health Group, Finablr and related companies.