Adib’s net profit rises 45% to AED2.33 billion in 2021

Abu Dhabi / Gulf Time

Abu Dhabi Islamic Bank (Adib) reported a year-on-year growth in net profit of 45% for the full year 2021 to AED2,330 million from AED1,604 million in 2020, resulting from solid top-line growth, continued optimisation of the cost base and lower impairments.
Revenue for 2021 improved 4% to AED5,560 million compared to AED5,358 million last year. This arose from a 9% year-on-year increase in non-funded income to AED2,215 million and 1% growth in funded income to AED3,345 million, achieved despite the lower rate environment.
Cost discipline was maintained amid ongoing investment in digital initiatives with operating expenses declining 8% year-on-year to AED2,260 million and the cost to income ratio improved 5.1 percentage points to 40.7%.
Impairments declined 27% year-on-year to AED954 million for the year 2021, reflecting an overall improvement in economic conditions relative to the pandemic-impacted previous period. This reduction was achieved while improving the provision coverage of non-performing financing (including collaterals) by 9.3 percentage points to 120.0%.
Total assets increased 7% from the previous year end to reach AED 136.9 billion, driven by 7% growth in gross financing and increased cash and balances with financial institutions and central banks. Customer deposits rose 8% year-on-year to AED109.6 billion from strong current and savings accounts (Casa) and short term investments generation.
Adib maintained a robust capital position with a common equity tier 1 ratio of 12.93% and total capital adequacy ratio of 18.57% after adjusting for proposed dividend for 2021. Further, the bank’s liquidity
position was healthy and comfortably within regulatory requirements, with the advances to stable funding ratio at 84.1% and the eligible liquid asset ratio at 19.7%.
Commenting on the results, Jawaan Al Awaidah Al Khaili, chairman of Adib, said, “Adib reported a strong perfomance in 2021, driving growth with full year net profit up 45% compared to 2020.”
Across our businesses, we saw elevated growth in client activity and our teams responded with differentiated ideas and offerings to meet our clients’ needs and create long-term value for our shareholders. As a result, our overall performance in 2021 reflected strong earnings and highlighted our ability to successfully adapt to a new operating environment while continuing to invest in talent and innovations to support future growth. Our strong performance in 2021 has allowed Adib’s Board of Directors to recommend an increase in its cash dividend payout by 51.2% representing 48.5% of the year’s net profit, in line with our commitment to driving long-term value for our shareholders.
“In 2021, we invested heavily in areas that will help us achieve further growth in the future, including launching new products and advancing our digital capabilities in line with our ambition to become the world’s most innovative Islamic bank. We were also honored that Adib once again has taken the lead in the UAE banking sector by launching new digital initiatives, including the launch of the world’s first Islamic car ecosystem Turbo and the launch of Amwali, the first Islamic bank for young people.
“As a leading Islamic bank, our commitment to a sustainable future is now embedded in our 5 year strategy and plan. We are developing the right framework that will help us to be a force of good in the societies we operate in. Whether it’s by developing new sustainability-linked financing solutions, offering the support our customers’ needs or financially empowering our younger generation, we will constantly innovate and expand our capabilities to accelerate our ESG agenda.
“Looking ahead, we believe that the UAE economy has proved its resilience in recent years, and a continuation of government investment in diversification initiatives will provide opportunities for ADIB to develop its corporate and retail banking businesses. While the global economic picture is uncertain, we can mitigate volatility by remaining committed to maintaining our best practice approach to risk management. There is no doubt that credit quality and capital strength lie at the core of our strategic success and in 2022 we will maintain a prudent approach commensurate with our long-term targets for return on shareholder equity.”
Nasser Al Awaidhi, group CEO of Adib said, “It is a great privilege to be joining Adib at a time when the bank is achieving strong momentum, and as it sets out to deliver its 2025 growth strategy. ADIB has many attributes with a proud history and a bright future. I am extremely proud of what the bank has accomplished in 2021. Our financial performance improved steadily, our balance sheet is growing and our commitment to serving our clients and communities is strong. These results highlight our robust strategy and our award-winning level of customer service that saw us welcoming appoximately 116,000 new additional customers during the year. Of course, there is always more to do. We know the market has good potential and we can still gain further market share; we know that the expectations of our customers are increasing and we have to work harder to continuously meet their ambitions. I will do everything I can to make all of our stakeholders proud of ADIB as we continue to build a better bank and improve our returns. We will invest in areas where we see opportunities for growth, and we will enhance our infrastructure, risk management and controls to ensure that we operate in a safe and sound manner and serve our customers with excellence.
“I will also be focusing on delivering our 5-year strategic plan by focusing on launching new products that will allow us to support customers across all financial stages in their lives, attracting new business segments where we can grow profitably by building on our strong brand and market position. Moreover, we will continue with our digital transformation strategy to become a digital-first financial institution 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 of the bank, said, “Broad based business momentum was sustained in the last quarter of the year and our pipelines remain healthy for 2022. We were able to deliver solid top-line growth of 4% during the year, driven by higher income from financing and growth in investment income. In combination with improved operating efficiency and normalizing risk cost, this revenue growth has resulted in a substantial 45% year-on-year increase in our net profit, which led to a healthy return on equity of 14.3%. We also had strong deposit growth of 8% year-on-year and gross customers financing of 7% year-on-year from both consumer and corporate finance. Despite a low rate-environment, our net profit margin ‘NPM’ remained market-leading at 3.25% for the period, aided by the low cost of funding that the bank enjoys by virtue of its higher Casa balances. A progressive normalistaion of rates in the coming quarters will also be beneficial to our earnings. While we continued to invest heavily in core areas that will help us achieve further growth in the future, including enhancing our customer experience and advancing our digital capabilities, we demonstrated strong expense discipline leading to a 5.1-percentage point improvement in our cost-to-income ratio.
“Throughout the period, we demonstrated 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, funding and capital ratios, and we therefore fully expect to be able to support our growth ambitions in the most effective and efficient manner.”