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ADCB Q2 net profit jumps 23% to Dh1.93b

Net interest income of the third largest UAE lender rose 14% to Dh2.93 billion

Abu Dhabi Commercial Bank (ADCB) has reported a 23 per cent jump in net profit to Dh1.93 billion second quarter 2023, beating estimates.

Net interest income of the third largest UAE lender rose 14 per cent to Dh2.93 billion on loan growth and higher benchmark rates in the second quarter, the bank said in a regulatory disclosure on the Abu Dhabi Securities Exchange.

The net profit topped analysts' mean estimate of Dh1.80 billion, according to data provider Refinitiv.

The bank’s operating income stood at Dh4.059 billion, surging 16 per cent YoY, with its cost to income ratio improving 260 basis points YoY to 32.5 per cent.

In the first half of 2023, the bank’s net profit reached Dh3.811 billion, a 25 per cent increase compared to H1 2022 while net interest income stood Dh5.782 billion, a 23 per cent jump YoY. Non-interest income in H1 rose by 28 per cent to Dh2.190 billion while operating income reached Dh7.971 billion, increasing by 24 per cent as the cost to income ratio improved 450 basis points YoY to 32.0 per cent.

Ala’a Eraiqat, ADCB’s group CEO said the bank is experiencing solid growth momentum and continues to set new records, with first half net profit up 25 per cent year on year at Dh3.811 billion, which translates into a return on average tangible equity of 14.8 per cent.

“The bank’s strong market position and digital innovation are driving growth against a backdrop of the UAE’s robust economic fundamentals. In the first half, ADCB extended Dh38 billion in new credit across diverse economic sectors and to the retail segment, resulting in net loan growth of 5 percent during the period. In tandem, deposits have also increased by Dh7 billion, reflecting the trust that customers place in our franchise,” Eraiqat said.

“The Bank’s focus on service excellence is translating into strong growth in our customer base. In the first half, ADCB attracted a record of over 260,000 new retail customers through its UAE operations, and over 3,500 new corporate clients,” he added.

ADCB is delivering high quality earnings growth characterised by a broad-based increase in revenues and disciplined cost management in the face of an inflationary environment, said Deepak Khullar, group CFO at ADCB.

“Healthy loan growth, coupled with rising benchmark rates, has driven a 14 per cent year on year increase in Q2 net interest income. It is also pleasing to see continued diversification in revenue streams. Quarterly fee and trading income were up 43 per cent and 48 per cent year on year, respectively. This contributed to a 22 per cent rise in non-interest income, which represented 27.8 per cent of total operating income in Q2, up from 26.4 per cent a year earlier,” said Khullar.