ADCB Posts AED 4.456 Billion Net Profit In H1’24 Amid Economic Growth

Abu Dhabi Commercial Bank PJSC (ADCB) has announced its financial results for the second quarter of 2024. The bank's performance in the first half of 2024 was driven by double-digit year-on-year growth in both net interest income and non-interest income, supported by strong economic fundamentals in the UAE.

ADCB reported a 30% year-on-year increase in net profit before tax to AED 2.593 billion for Q2’24. For the first half of the year, net profit before tax rose by 28% to AED 5.023 billion. Post-tax net profit for H1’24 stood at AED 4.456 billion, with Q2’24 contributing AED 2.317 billion, reflecting returns on average tangible equity of 15.0% and 16.5%, respectively.

The bank's operating income exceeded AED 9 billion for the first half of the year, showcasing double-digit growth in both net interest income and non-interest income. This growth was bolstered by rising fee income, which diversified revenue streams through strong customer relationships and a comprehensive range of core business offerings.

ADCB has achieved significant milestones, including surpassing AED 600 billion in total assets, growing at a compounded annual growth rate (CAGR) of 14% over the past three years. The bank recorded AED 30 billion in net loan growth during H1’24, driven by robust demand from corporate and individual customers.

This growth was marked by increased exposure to high-quality credits, resulting in credit risk-weighted assets rising by only AED 6 billion in the first six months of 2024. Consequently, ADCB has updated its full-year loan growth guidance to approximately 15%, up from the previous range of 8% to 10%.

Retail Banking Expansion

The Retail Banking Group (RBG) is leveraging digital platforms to expand its reach. ADCB’s onboarding app set a new monthly record with 44,000 new customer registrations in May. Digital engagement also surged, with internet and mobile banking subscribers increasing by 34% year-on-year.

The bank saw strong loan growth in retail banking: personal loans rose by 10%, auto loans by 19%, and mortgages increased by 24% as of June end. The cards business also flourished with over 64,000 new cards issued in Q2’24, driven by digital onboarding and ecosystem partnerships.

Corporate and Investment Banking Growth

The Corporate and Investment Group (CIBG) capitalised on rising corporate investments and capital markets activity. Over 3,500 new banking relationships were established year-to-date across the UAE and GCC regions.

A strong advisory offering and sophisticated product suite have ensured that ADCB’s CIBG business maintains a market-leading fee-to-income ratio. In Q2’24, ADCB continued to grow its market share through solid credit expansion focused on high-quality credit counterparties.

Strategic Rebalancing

In line with its strategy to rebalance its lending portfolio, ADCB increased loans to government-related entities (GREs) to 27% of total loans from December’s figure of 23%. Conversely, exposure to real estate investment dropped significantly from December’s figure of 22% to just 15%. This strategic shift contributed to an improved risk-adjusted net interest margin of 2.11% for H1’24 compared to last year's figure of 2.05%, alongside a cost-of-risk improvement of 15 basis points to stand at 0.58%.

Deposits and Capital Adequacy

ADCB's strong franchise continues attracting significant customer deposits, which reached AED 390 billion at June end—an increase of AED 27 billion during H1’24. Despite higher interest rates, current and savings account (CASA) deposits grew by AED21 billion over the previous year, accounting for nearly half (44%) of total deposits.

The bank's balance sheet remains robust with healthy capital ratios; capital adequacy ratio strengthened to stand at16.43%, while CET1 ratio improved to13.17% as at June end.

Looking ahead into future quarters remains focused on enhancing customer experience excellence as a core priority aimed towards expanding market share further within competitive landscape dynamics prevailing across regional economies today.

With inputs from WAM