Abu Dhabi Islamic Bank Posts Record Quarterly Profit Of AED 319.1 Million
Management Discussion & Analysis For The Quarter Ending 30 September 2011
Abu Dhabi Islamic Bank (ADIB) posted its highest ever quarterly net profit of AED 319.1 million for Q3 2011 and a net profit of AED 938.9 million for the first 9 months 2011, an increase of 3.2% over the same period in 2010. Despite difficult market conditions, as a result of the continued global financial crises, performance from the main banking business was particularly strong as the Bank’s net profit grew by 12.7% to AED 1,086.4 million from AED 964.0 million in the same nine-month period in 2010. Strong year-on-year customer activity in the Retail Banking unit, which attained the number one ranking for customer service in the UAE, saw ADIB’s customer numbers increase by 9.6% in the last year to more than 448,000 customers. However, despite the growth in customer numbers and a more diversified product offering, the impact of the UAE Central Bank guidelines on Personal Banking fee income and asset growth was noticeable and the Bank expects subdued growth to continue into 2012. Notwithstanding this, ADIB’s enhanced Transaction Banking and Investment Banking franchises, more than compensated for the decline in Personal Banking fees and the quarter saw total fee and commission income increase by 6.0% versus Q3 2010.
The Bank has maintained its strong liquidity position, as the advances to stable funds ratio improved to 84.6% at the end of 30 Sep 2011, while continued emphasis on managing the cost of funds saw the bank further reduce its higher cost deposits as current and savings account balances reached AED 24.8 billion at the end of Q3 2011, an increase of 21.8% for the same period in 2010. Furthermore, ADIB continued its conservative approach to non-performing asset recognition and provisioning, ensuring a healthy non-performing asset coverage ratio as well as continuing the quarterly impairment review of the portfolio held by the real estate subsidiary, Burooj Properties.
A best practice approach and focus on the Bank’s strategy continues to drive growth
The third quarter of 2011 saw ADIB’s management continue to take a conservative approach to the recognition of non-performing credit exposures and investments. As a result, the Bank has taken an additional AED 144.6 million in credit provisions and impairments in Q3 2011, thereby increasing total individual credit provisions to AED 2.1 billion and collective provisions to AED 628 million, which together amount to 5.3% of gross customer financing and represent a pre-collateral non-performing coverage ratio of 59.6%. In addition a further AED 6.2 million in impairments was taken against the real estate subsidiary’s portfolio. Notwithstanding this, net profit for the Group reached a record AED 319.1 million. This highlights the underlying strength of the core banking operations, where the Bank posted a 3.5% increase in net profit for the quarter versus Q3 2010 to reach AED 354.4 million on a stand-alone basis.
Emirate: Abu Dhabi
Date: Oct 25, 2011
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