Abu Dhabi Commercial Bank PJSC (ADCB) reported its financial results for the year ended 31 December 2013, subject to approval by the UAE Central Bank.
Financial highlights (2013 vs. 2012)
1. Delivered strong performance with record levels of net profit and operating income
– Net profit up 29% to Dhs3,620m
– Operating income up 11% to Dhs7,320m
– Operating profit before impairment allowances up 10% to Dhs4,961m
– Net interest margin improved to 3.42% from 3.28% in 2012
2. Conservatively managed balance sheet, disciplined growth
– Net loans and advances increased 7% to Dhs132bn as at 31 December 2013
– Deposits from customer increased 6% to Dhs115bn as at 31 December 2013
– CASA deposits contributed 39% of total deposits compared to 33% as at 31 December 2012
3. Capital and liquidity remain strong
– Capital adequacy ratio of 21.21% and Tier 1 ratio of 16.62%
– Net lender of Dhs8.5bn in the interbank markets as at 31 December 2013
4. Improved credit quality and disciplined cost management
– Non-performing loan ratio improved to 4.1% from 5.4% as at 31 December 2012
– Provision coverage ratio improved to 109.7% from 82.2% as at 31 December 2012
– Past due but not impaired loans decreased by 50% against 31 December 2012
– Cost of risk declined to 0.90% from 1.20% in 2012
– Stable cost to income ratio at 32.2% compared to 31.4% in 2012
5. Shareholders receive tangible returns
– Recommended cash dividend of 30%
– Basic EPS improved 31% to Dhs0.59 compared to Dhs0.45 in 2012
– The Bank bought back 392,741,711 ordinary shares at a total consideration of Dhs1,797m, equivalent to 7.02% of the issued share capital, which resulted in an EPS uplift of 7% on a pro-forma basis
– Total shareholder return of 118%
6. Remained committed to strengthening the UAE Economy
– 95% of loans (net) in the UAE
The Bank reported record results in 2013, delivering a net profit of Dhs3,620m, up 29% from 2012. The results reflect strong underlying performance across all ADCB operations.
“ADCB is a leading institution with a vision and strategy for the future,” said ADCB Chairman Eissa Al Suwaidi.
“Our 2013 results demonstrate the Bank’s ability to achieve the goals we set for ourselves. As a result of the Bank’s continued healthy financial position and capital base, ADCB Board of Directors has recommended a 30% cash dividend of Dhs1.56bn (net of treasury shares), equivalent to 50% of profit attributable to equity shareholders of the Bank, subject to approval of the UAE Central Bank.”
The Chairman also noted that ADCB’s strong performance reflects the Bank’s commitment to the Abu Dhabi Economic Vision 2030.
“ADCB moves in concert with the Vision’s policy agenda and principles, as well as its stated goal that the emirate should become a shining example on the international business stage,” he said.
“During 2013, the Bank continued to focus on a number of important areas of governance and strategy, including:
– Our emphasis on attracting, training, and retaining high-calibre UAE national talent across all levels of the Bank. At the end of the year 40% of the Bank’s staff were UAE nationals.
– The Bank remains focused on maximising shareholder value and began a shareholder buyback program in 2013. The Bank repurchased 7.02% of its share capital equivalent to 392.7m ordinary shares, improving its return on equity to 15.5%.
– ADCB renewed its commitment to corporate social responsibility as an inseparable part of operations across its businesses. The Bank published a sustainability report in 2013 and appreciates the need for local and regional banks to be strong and secure to continue contributing to the development of local communities and economies. 95% of ADCB’s loan book is in the UAE, and the Bank has donated over Dhs7.79m to various causes within the country within the last year alone.
The Bank remains committed to contributing to the development of the UAE banking sector and the country, and on behalf of the Board, I thank His Highness Sheikh Khalifa Bin Zayed Al Nahyan, the UAE President and Ruler of Abu Dhabi, may Almighty Allah safeguard him and grant him good health, His Highness Sheikh Mohamed Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, His Highness Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, and the UAE Central Bank for their continued support for ADCB and the future development of the UAE economy. I would also like to extend my gratitude and appreciation to our shareholders, valued customers and the ADCB executive management team and employees.”
A Solid Foundation: Ambition + Discipline
Commenting on the Bank’s performance, Ala’a Eraiqat, Member of the Board and Chief Executive Officer said: “In a persistently challenging economic environment, we laid the strategic foundations for future growth and profitability by striking a balance between ambition and discipline. We are pleased to report a record net profit of Dhs3,620m and a record operating income of Dhs7,320m in 2013.
“ADCB has a strong and conservative balance sheet that gives us the platform to accelerate business growth in the UAE. Underlying the Bank’s record year was a successful implementation of a corporate strategy that combined ambition with measured discipline. In an extremely competitive environment, net loans grew 7% over 2012 and 10% over the last quarter, despite a large repayment in September, which significantly reduced our concentration exposure. Throughout the year, the Bank optimised the overall quality of the loan book to maximise returns and minimise risks. In addition, the Bank reported a substantial increase in CASA customer deposits, relying on diversified sources of funding.
“Our capital is at industry leading levels, and we ended 2013 with a capital adequacy ratio of 21.21%. The Bank repaid the entire amount of Tier 2 loan of Dhs6.7bn from the Ministry of Finance in the first half of 2013 and substituted this with lower cost funding from the wholesale markets. This marked the issuance of ADCB’s first concurrently-issued dual senior and subordinated debt offering of a total of $1.5bn and the largest subordinated debt transaction by a Middle-Eastern Bank. Today, we have more than adequate capital to support our strategic growth plans and are well positioned to return excess capital to our shareholders via dividends and share buybacks.”
Managing cost base and risk
“In 2013, credit quality was improved, risk was reduced, and cost management was disciplined. Careful management of the cost base allowed the Bank to maintain a stable cost-to-income ratio of 32.2%. We continue to manage our expenses well, whilst also investing in our systems, people, processes and infrastructure to help us grow revenues.
ADCB has a strong risk management culture and in 2013 we observed improvements in credit quality. The Bank’s disciplined approach to its balance sheet management lowered its cost of risk to 0.9%, raised its provision coverage ratio to 109.7% for the year, while past due but not impaired loans decreased by 50% over 2012. In addition, the non performing loan ratio improved to 4.1% from 5.4% in 2012, and the collective loan impairment allowance was 1.96% of credit risk weighted assets. These improvements were achieved while simultaneously increasing net loans 7% to Dhs132bn.”
Ala’a Eraiqat also attributed the Bank’s strong performance to ADCB’s customer-centric focus.
“We put customers first and help them succeed financially,” he said. “When we do this, we enhance relationships, build loyalty, and earn trust. Our success reflects the efforts of our Board members, management executives, managers, and employees, who bring our values to life every day. They were guided, as always, by our strong vision of creating the most valuable bank in the UAE.
Toward the end of the year, we launched a comprehensive rebranding initiative, encompassing a new corporate identity, redesigned bank branches, and a new advertising campaign. The redesign, which will continue to roll out over the next two years, positions the bank as more intuitive, accessible, and welcoming: a reliable partner to help our customers achieve their ambitions.”
“The UAE market continues to remain intensely competitive, yet the prospects of economic growth in 2014 are promising. We have consistently demonstrated our competitive advantage and remain confident that our strong and conservative balance sheet will provide a platform for future growth.
We will take advantage of future improvements to capitalize on value-adding opportunities for our shareholders and to contribute to the UAE economy as a whole.”
Awards in 2013:
– ‘Best Bank in Payments and Collections’ in the Middle East region and the ‘Best Bank in Trade Finance’ in the UAE by Global Finance Magazine.
– The Human Resources Development Award in Emiratization in the banking industry by The Emirates Institute for Banking & Financial Studies (EIBFS), including the “The Best Emiratization CEO Award”, “Honoring UAE Nationals in Higher Management positions in the Banking Sector Award” and “Distinguished Woman in the Banking & Finance sectors Award”.
– The Banker Middle East Product Awards 2013, “Best New SME Product”, “Best Trade Finance Offering” and “Best Cash Management”.
– World Finance Magazine, “The Best Corporate Governance – United Arab Emirates 2013″.
– The Banker ‘Deals of the Year’ 2013 Awards; Winner of Deal of the Year 2013: Middle East – Restructuring Category – Global Investment House Restructuring Deal, Winner of Deal of the Year 2013: Middle East – Islamic Finance Category Jebel Ali Free Zone Sukuk refinancing.
– Banker Middle East Industry Awards 2013; “Best Transaction Bank” and “Best Corporate Bank”.
– ‘Highly Commended for the Best Trade Bank in the Middle East and North Africa’ by Trade Finance Excellence Awards 2013.
– ‘Best Trade Bank in the Middle East – Silver’ by TFR Excellence Awards 2013.
– ‘Best Cash Management Bank in the UAE’ from Euromoney.
– Global Islamic Finance Awards (GIFA) – “Best Islamic Banking Window” and the “Most Innovative Product of the Year”.
Senior Officer-Media Relations
Abu Dhabi Commercial Bank
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