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ADCB net profit down 36pc in Q1
ABU DHABI — Abu Dhabi Commercial Bank, or ADCB, the country’s third largest banking institution, reported a 36 per cent drop in profit to Dh225 million in the first quarter of the year, due to impairment charges on the loan and investment book.
Total operating income for the first three months reported an increase of 26 per cent over the same period last reaching Dh1.270 billion, the bank said in a regulatory filing.
The healthy growth was attributed to focus on core operations of the bank, strong net interest income, improved net interest margin and increased revenue generation from RHB, in Malaysia.
Net interest income registered a growth of 23 per cent over first three months of last year at Dh872 million, on account of successful repricing of loans and lower cost of funds due to lower EIBOR/LIBOR which resulted in a 26 per cent drop in interest expenses over first quarter of last year and at par with last quarter of 2009.
Net interest margin increased to 2.59 per cent reflecting an increase of 32 bps over the first quarter of 2009.
ADCB’s Chief Executive Officer Ala’a Eraiqat, said that robust top line numbers were impacted by significant impairment charges on the loan and investment book in line.
“This is in line with our medium term strategy of the bank and our continuation of building a stronger ADCB for the future and wish for the best yet prepare for the worse,” he said.
The robust increase in non-interest income, 33 per cent over first three months of last year was mainly attributed to strong income from RHB, and higher gains of Dh22.7 million on investment & trading securities along with income from other associates.
RHB income stood at Dh99 million compared to Dh22 million in Q1’09.
Net fees and commission income reported an increase of three per cent over Q1’09 at Dh210 million.
The net impairment allowances for the quarter were Dh681 million, of which Dh589 million related to provisions for loans and advances, the bank said in a regulatory filing.
The collective impairment provisions in Q1’10 were at Dh218 million and individual impairment provisions were at Dh395 million, while recoveries were at Dh25 million.
Impairment allowances on investment securities were Dh35 million whilst impairment on the Bank’s CDS portfolio was Dh57 million. Operating profits before provisions continued to remain strong in the quarter at Dh908 million, an increase of 44 per cent over January-March period last year. Expansion of pre-provision income was achieved through successful cost control, loan re-pricing and widening interest margins.
The results reflect solid growth in ADCB’s core operations, which reported a growth of 34 per cent over same period last year.
Total assets aggregated Dh163.7 billion as at 31 March 2010, representing controlled growth of two per cent over December 31, 2009.
Aggregated customer loans increased to Dh117.2 billion from Dh116.6 billion in the comparable period last year. Customer deposits climbed four per cent to Dh90.1 billion at the end of the quarter.
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