ADCB Net Profits Soar 36% Despite Challenging Environment – News


The Bank’s third quarter net profit fell seven percent to Dh 1.28 billion from Dh 1.4 billion in the same quarter last year

Posted: Sun, Oct 31, 2021, 6:29 PM

Abu Dhabi Commercial Bank (ADCB) on Sunday reported 36% year-over-year net profit growth and said the bank had shown a resilient performance in a low interest rate environment.

In a statement, the bank said its nine-month net profit reached 3.8 billion dirhams between January and September 2021, compared to 2.8 billion dirhams during the same period last year. However, third quarter net profit fell seven percent to 1.28 billion dirhams from 1.4 billion dirhams in the same quarter last year. Net interest income of MAD 2.179 billion for the July-September 2021 quarter decreased by 6% and the Net Interest Margin (NIM) decreased by 26 basis points sequentially to 2.34%. This is mainly due to a higher interest in suspense reversals and fair value closeouts in the second quarter of 2021.

Income mix

The group continues to diversify the composition of its income, its nine-month non-interest income increasing this year by 19% to 2.369 billion dirhams, representing 26% of operating income, compared to 21% in the same period. ‘last year.

Net fees and commission income of MAD 1.38 billion in January-September 2021 increased by 24% due to a 69% increase in card fees and a 26% increase in card fees. loan processing. In the July-September 2021 quarter, non-interest income was MAD 726 million, up 3% and down 14% sequentially, mainly due to higher loan processing fees in the second quarter of 2021 due to large corporate reimbursements.

The ADCB continued to manage costs prudently, with operating expenses falling by eight percent and four percent sequentially to reach MAD 1.013 billion in the third quarter of 2021. The bank is on track to exceed its synergy target merger costs of 1 billion dirhams for 2021, having achieved synergies of 984 million MAD during the nine months of 2021, with 322 million MAD recorded in the third quarter.

The acceleration of digital transformation has led to an increase in the number of subscribers to the bank’s mobile banking application to more than 800,000 customers as of September 30, 2021, up 27%. More than 940,000 customers are now subscribed to Internet or mobile Internet banking.

Restructuring of the NMC group

The ADCB said it is expected to receive “exit instruments” in a $ 2.25 billion “Holdco facility”, a claim in an amount equal to the expected future value of the NMC group after approval of the restructuring of the debt of the troubled company on September 1, 2021.

“All net proceeds from a future sale of the business will accrue to the holders of the exit instruments, including any value above 2.25 billion dirhams. There are also other opportunities to benefit from potential recoveries arising from the pending litigation of the company.

“Participants in the exit instruments will receive a cash margin of 0.5% per annum, as well as an in-kind payment of 2% per annum (paid with principal), which will accumulate from the date of the signature of the facility document, ”according to the bank statement.

ADCB is expected to receive approximately 39 percent of the transferable output instruments. The bank participated in a $ 325 million “administrative finance facility” (AFF), which granted uplift and conversion rights in the new Holdco facility.

“AFF should be repaid with the proceeds from the sale of non-core NMC group assets. The bank will appoint three of the seven non-executive directors that the participants in the exit instruments will select to the board of directors of the new Holdco, ”the statement read.

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