Abu Dhabi Commercial Bank PJSC (ADCB) has released its financial results for the third quarter of 2024, showcasing a 30 percent rise in profit before tax, amounting to AED7.702 billion for the first nine months. The bank’s net profit after tax reached AED6.846 billion.
Strategic focus on growth
In its announcement, ADCB emphasized its robust financial performance, driven by a strategic focus on increasing market share, enhancing corporate banking and investment services, and expanding its retail customer base. The bank experienced notable loan growth, an uptick in fee and commission income, and advancements in operational efficiency and credit quality.
Asset and loan growth
By the end of September 2024, ADCB’s total assets surged by 19 percent to AED639 billion, with net loans and advances to customers rising 21 percent to AED344 billion. Customer deposits in current and savings accounts totaled AED169 billion by the same date.
Capital adequacy and risk management
ADCB reported a capital adequacy ratio of 16.68 percent, with a common equity tier 1 (CET1) ratio of 13.11 percent. The liquidity coverage ratio was recorded at 136.3 percent, and the loan-to-deposit ratio stood at 84.6 percent. The cost of risk improved significantly to 0.42 percent in Q3 2024, down from 0.73 percent in the prior year’s quarter, while the cost of risk for the first nine months of 2024 was 0.52 percent.
Emphasis on digital transformation
The bank’s solid financial results highlight its strategic emphasis on harnessing digital transformation and AI-driven efficiencies to boost profitability and support growth across key sectors.
Second quarter performance overview
In July 2024, ADCB also announced its financial results for the second quarter of 2024, reflecting strong performance in the first half of the year, propelled by double-digit year-on-year growth in both net interest income and non-interest income, against a backdrop of robust UAE economic fundamentals.
Momentum in operational performance
According to its financial results statement, ADCB’s ambitious strategy for accelerated growth is yielding strong momentum in both operational and financial performance. Net profit before tax surged 30 percent year-on-year to AED2.593 billion in Q2, and climbed 28 percent to AED5.023 billion for the first half. After tax, net profit for the first half stood at AED4.456 billion ($1.2 billion), with Q2 net profit reaching AED2.317 billion, translating to a return on average tangible equity of 15.0 percent and 16.5 percent, respectively.
Updated loan growth guidance
In light of impressive loan growth year-to-date and a healthy credit pipeline, ADCB has revised its full-year 2024 loan growth guidance to approximately 15 percent, up from a previous estimate of 8 percent to 10 percent.
Portfolio rebalancing strategy
During Q2, ADCB continued to expand its market share through strong credit growth, focusing on high-quality credit counterparts for effective capital deployment. As part of its strategy to rebalance its lending portfolio, loans to government-related entities (GREs) have risen significantly to 27 percent of total loans from 23 percent in December 2022, while exposure to real estate investment has decreased notably to 15 percent from 22 percent.
Improved risk-adjusted margin
Consequently, the risk-adjusted net interest margin increased to 2.11 percent in the first half, up from 2.05 percent a year prior, aided by a 15-basis point improvement in the cost of risk to 0.58 percent.
Customer deposit growth
Furthermore, Abu Dhabi Commercial Bank’s strong brand continues to attract substantial customer deposits, which reached AED390 billion by the end of June, reflecting an increase of AED27 billion in the first half. Even with a rising interest rate environment, current and savings account (CASA) deposits grew by AED21 billion year-over-year, constituting 44 percent of total deposits.
Read more: ADCB raises $500 million with debut green bonds
Green bond issuance
In 2022, ADCB also successfully issued its inaugural $500 million green bond to finance projects aligned with environmental, social, and governance (ESG) standards. This five-year bond, priced 115 basis points above treasuries, featured a 4.5 percent coupon rate and was 3.8 times oversubscribed, garnering $1.9 billion in orders from a diverse range of investors. Issued on September 14, 2022, following a global roadshow, the bond reflects strong confidence in ADCB and its management of ESG risks and opportunities.
Commitment to sustainability
Abu Dhabi Commercial Bank has integrated ESG into its corporate strategy and aligned its sustainability efforts with the UAE’s goals for an inclusive, net-zero economy. The bank is committed to providing AED35 billion ($9.53 billion) in green finance by 2030, achieving net-zero in its own operations, and reducing financed emissions in line with the UAE government’s net-zero objectives.
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