ADCB profit up 10% to Dh1.12b in Q2

(MENAFN- Khaleej Times) Rise in non-interest income driven from fees and trading income helped soar Abu Dhabi Commercial Bank's net profit in the second quarter of the year.

The second biggest lender by assets in Abu Dhabi reported a net profit of Dh1.126 billion, up 10 per cent in April-June quarter 2016.

Operating income rose one per cent to Dh2.143 billion, impacted by higher funding costs, non-interest income of Dh617 million, was up 14 per cent, driven by higher fees and trading income.

However, net profit dropped 15 per cent year on year to Dh2.147 billion in the January-June period, due to higher impairment allowances reflecting current market conditions. The lender reported strong balance sheet as net loan and advances to customers increased six per cent to Dh155 billion over 31 December 2015; Deposits from customers rose four per cent to Dh149 billion. Low cost CASA deposits of Dh66 billion increased five per cent over 31 December 2015 and comprised 44.5 per cent of total customer deposits.

There was a continued focus on improving sources of funding and liquidity while capital position continues to remain robust as capital adequacy ratio was 18.40 per cent and tier I ratio was 15.07 per cent as at 30 June 2016, the lender said in a regulatory statement to Abu Dhabi Securities Exchange.

The bank was a net lender of Dh21 billion in the interbank markets while its investment securities increased 18 per cent year-on-year to Dh25 billion as at 30 June 2016. ADCB reported strong liquidity ratio of 24.9 per cent while advances to stable resources at a healthy 89.4 per cent.

Commenting on the results, Eissa Mohamed Al Suwaidi, chairman said: "Our strategic pillars continue to define our business model and provide a clear direction for us."

"We are well positioned for the second half of 2016 and confident in our ability to benefit from future growth opportunities in the UAE," he said. Ala'a Eraiqat, member of the board and chief executive officer, said each of the bank's businesses performed well, with consistent underlying growth. "We delivered this growth despite the weaker operating environment, and ended first half 2016 with improved asset quality metrics, including a non-performing loan ratio of 2.7 per cent and a provision coverage ratio of 133 per cent."

"We remain prudent in our growth strategy and continue to focus on maintaining a diversified funding base while liquidity remains a top priority," said Eraiqat.

"Year-to- date we have made good progress in a number of areas. In a very competitive environment, we increased low cost CASA deposits by five per cent, grew investment book by 18 per cent, and as at 30 June 2016, we continued to be a net lender of over Dh20 billion in the interbank markets."

"Our relentless focus on diversifying our revenues resulted in higher non-interest income contribution for the first half of the year, primarily driven by higher fees and commission income and higher trading income," said Eraiqat.

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