ADCB, the third-largest bank by assets in the UAE, has announced a 20 per cent increase in its second-quarter profit, surpassing the expectations of analysts.
The bank’s net profit attributable to shareholders reached AED 2.32B ($631.65M) for the three months ending June 30, up from AED 1.93B a year earlier. This result exceeded the forecast of Dhs2.05bn from six analysts surveyed by Reuters.
ADCB’s Q2 earnings
ADCB reported substantial growth in its Q2 2024 financial results, driven by higher net interest and non-interest income, according to state news agency WAM.
The bank’s pre-tax net profit for the second quarter increased by 30 per cent year-on-year to AED 2.593B, while the first half of 2024 saw a 28 per cent rise to AED 5.023B. Post-tax net profit for the first half stood at AED 4.456B, with the second quarter alone contributing AED 2.317B, reflecting returns on average tangible equity of 15.0 per cent and 16.5 per cent respectively.
ADCB’s balance sheet remains strong, supported by robust capital ratios, with the capital adequacy and CET1 ratios strengthening to 16.43 per cent and 13.17 per cent respectively, according to the report.
UAE economy
ADCB’s strong performance is backed by solid UAE economic fundamentals and a strategic focus on accelerated growth, as stated in its official announcement. The bank achieved operating income of over Dhs9bn in the first half of the year, with double-digit year-on-year growth in both net interest and non-interest income.
Revenue diversification was bolstered by increased fee income, driven by strong customer relationships and an advanced product range.
The bank has surpassed AED 600B in total assets, growing at a compounded annual growth rate (CAGR) of 14 per cent over the past three years. ADCB also reported AED 30B in net loan growth in the first half of the year, with increased exposure to high-quality credits.
As a result, credit risk-weighted assets increased by just AED 6B in the first six months of 2024.
ADCB’s strategy to rebalance its lending portfolio has led to an uptick in loans to government-related entities (GREs), accounting for 27 per cent of total loans, while exposure to real estate investments has decreased significantly.
The bank’s risk-adjusted net interest margin improved to 2.11 per cent in the first half, supported by a 15 basis point reduction in cost of risk to 0.58 per cent.
Customer deposits grew to AED 390B by the end of June, with current and savings account (CASA) deposits making up 44 per cent of total deposits.
Outlook
With strong loan growth achieved year-to-date and a healthy credit pipeline, ADCB has adjusted its full-year 2024 loan growth forecast to approximately 15 per cent, up from the previous range of 8 per cent to 10 per cent.
The banking group continues to leverage digital platforms for expansion, achieving a new monthly record of 44,000 new customer registrations in May.
Digital engagement has also risen, with internet and mobile banking subscribers increasing by 34 per cent year-on-year. The bank has experienced significant growth in personal loans, auto loans, and mortgages, and issued over 64,000 new cards in Q2 2024 through digital onboarding and ecosystem partnerships.
