Abu Dhabi Islamic Bank’s (Adib) net profit surged 89% year-on-year to AED1.11 billion ($299.46 million) from AED588 million in H1 2020. 

 

The growth in net profit reflects the strong underlying performance across the business supported by a 3.4% growth in total revenue to AED2.64 billion compared to AED2.56 billion in the same period last year. Growth in revenue was driven by an increase in non-funding income of 19%, boosted by a 11% improvement in fee income.

 

The financial results were also supported by an 8% decline in operating expenses with cost to income ratio improving 5% due to the successful implementation of technology-led initiatives that helped reduce the cost of sales and customer acquisition while also streamlining internal processes. 

 

Adib continued to demonstrate strengths and depths in its balance sheet with a 5% year-on-year increase in total assets, driven by a 7% growth in deposits and a 3% growth in gross customer financing compared to H1 2020. 

 

The successful implementation of cost initiatives and the efficacy of the digital strategy improved productivity resulted in a 7.7% improvement in operating expenses to AED1.16 billion compared to H1 2020, and leading to an improvement in cost-to-income ratio by 529 basis points compared to H1 2020.

 

Adib preserves one of the highest net profit margins in the market at 3.13% H1 2021 versus 3.58% H1 2020, supported by one of the lowest cost of funds in the market.

 

97,035 new customers joined Adib in the 12 months period ended H1 2021 as Adib’s emphasis on long-term customer relationships and delivering a superior customer service continues to bear fruit.

 

Net impairment charges decreased by 48.2% to AED366.8 million in H1 2021 from AED708.6 million in H1 2020 reflecting improvements in the micro- and macro- economic outlook.

 

Adib produced 3% year-on-year growth, driven by improvements of 3% in wholesale banking customer financing and 2% in retail customer financing compared to H1 2020.

 

Adib Chairman Jawaan Awaidha Suhail Awaidha Al Khaili said: “We are really encouraged by our financial results in the first half of 2021 as we continue to deliver strong operational performance across all business lines. Despite continued challenging market conditions, Adib delivered robust year-on-year growth underscored by positive increases on our assets, revenues, and net profits while also maintaining a strong balance sheet, liquidity, and capital ratios. Our return on shareholders’ equity have also improved to 14%, in line with our commitment to enhance our profitability and deliver superior value to our shareholders.

 

“Our investments in key strategic and digital initiatives enabled us to enhance customer experience, support business productivity, and position the bank for future growth. We have seen an increase in key digital metrics with more and more customers benefiting from our enhanced digital banking features.

 

“We are focused on the priorities we outlined as part of our 5-year strategic review. We are now embarking on a new journey with a renewed purpose and a revamped vision.  We are aiming to develop and launch new banking products and services that will allow us to support customers in all important financial stages in their lives while attracting new segments where we can grow profitably building on our strong brand and market position. We will continue with our digital transformation strategy to build a future-proof bank by rigorously simplifying and centralizing our operating model that will enable us to focus on clients and work more efficiently.”

 

Mohamed Abdelbary, Group Chief Financial Officer, said: “Adib delivered a strong set of results in the first half of 2021, with net profits increasing by 89% to AED1.1 billion. This is further evidence that Adib is in the right path in all its businesses and is building sustainable profitability in what continues to be an uncertain economic environment.

 

“While low rates remain a key headwind that impacted of revenues from funding, we were still able to grow our revenues driven by improved numbers from our customer financing as well as in investment income, fees & commissions. Throughout the period, we continued to demonstrate risk discipline, with our asset quality broadly stable underpinned by a prudent risk approach and recoveries. Our balance sheet foundation remains robust, with solid liquidity and funding ratios, and a strong capital position with a CET1 at 13.3%.

 

“The strength of our retail banking business continues to drive Adib’s performance. This highlights the bank’s increasingly powerful brand and its success in successfully employing its client franchise to increase market share, adding over 97,000 customers in the 12 months period ended 30 June 2021. This has resulted in a 7% rise in customer deposits and a 14% increase in CASA deposits (including STI) allowing Adib to maintain one of the highest net profit margins in the market of 3.13%.”

-- TradeArabia News Service