Abu Dhabi Commercial Bank (ADCB) reported a drop of 17% in its earnings for third-quarter, ending on September 30, 2016, according to a financial statement issued by the bank. In Q3 2015, ADCB made a net profit of Dh1.20 billion, while this time, the net profit has amounted to Dh999.1 million.
The bank reported a net profit of Dh3.153 billion for the first nine months of 2016, which is 16% lower than last year’s profit. As a consequence of higher funding costs, the bank’s total net interest income rose by 2% year-on-year to Dh4.628 billion, while the operating income increased by 1% to Dh6.324 billion in the same period.
Due to ADCB’s consistent efforts and focus on diversifying their revenue streams, the non-interest income rose by 12% to Dh1.697 billion in the first nine months of 2016.
Income of Bank
Group’s chief executive officer and a member of the board, Ala’a Eraiqat while commenting about ADCB’s performance said the bank has shown ‘strong financial results for the nine-month period of 2016, reporting a net profit Dh3.153 billion and industry leading return on equity of 16 per cent’.
According to the financial statement, retail banking fees showed an increase of 15% year-on-year, amounting to Dh523 million, whereas net fee income rose by 4% to Dh1.092 billion. The bank’s income from Islamic financing grew 23% to Dh609 million, and the interested income jumped 10% year-on-year to Dh6.423 billion.
ADCB’s NPL and provision coverage ratios were increased by 2.6% and 133.1% respectively in the first nine months of 2016, up from NPL and provision coverage ratios of 3.0% and 128.5% from a year earlier.
Assets and loans
“Our balance sheet remains resilient and registered a healthy growth in net loans and customer deposits year to date, 10% and 7% respectively,” said Mr Eraiqat.
The Bank has continued with its aggressive approach towards increasing its assets as they rose by 12% to Dh225 billion. The customer base of ADCB has become more loyal as deposits from customers jumped 7% to Dh153 billion, while net loans and advances rose 10%Dh162 billion in the first nine months of this year. A major portion of the customer deposits, 42.2%, comprised of low-cost current and savings account (CASA).
The group’s chief financial officer, Deepak Khullar further elaborated that commercial banking loans (gross) increased by 5%, while consumer banking loans (total) rose by 9%.
“Operating in a tighter liquidity environment, the bank also increased its time deposits significantly, which resulted in higher cost of funds year on year,” he concluded.
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