ADIB's Q1 2023 net profit grew by 54% YoY to AED 1.1 billion

ADIB

Abu Dhabi Islamic Bank (ADIB) reported a growth in net profit of 54% for the first quarter of 2023 to AED 1.1 billion from AED 715 million in Q1 2022, underpinned by healthy business growth and higher margins. Revenue for Q1 2023 improved by 45% to AED 2.0 billion compared to AED 1.4 billion in the corresponding period of last year. This was driven by 81% growth in funded income to AED 1.4 billion, achieved from the growth in customer financing and higher margins.

Jawaan Awaidah Al Khaili, Chairman, said, “The UAE economy saw a good start in 2023 supported by higher oil prices and continuation of the diversification strategy. Capitalising on the encouraging economic environment, ADIB has delivered a solid performance in the first quarter of 2023 with Net Profit increasing by 54% to AED 1.1 billion on the back of excellent progress on our growth strategy and transformation initiatives, in line with our long term plan to deliver sustainable value to all our stakeholders. The record return on equity of 23.4% reflects the benefit of higher income as well as significant structural gains from our strategic initiatives.

“We continued to attract new customers to the bank welcoming 46,000 new customers in Q1 2023 and growing our market share. Our efforts have led us to be recognised as the Best Bank in the UAE by Global Finance, a testament to our robust financial performance and pioneering approach to innovation in digital banking.

“We are also committed to embedding sustainability and ESG into our strategic plan and we are seeing a true integration of sustainability into our businesses. We look forward to working with the UAE government and our peers to develop innovative solutions as the UAE marked this year as the Sustainability Year and preparing to host Cop 28.

“Looking ahead, we do not believe the global macroeconomics challenges will curtail the strength and resilience of our local economy. We see that the UAE economy will continue to improve. We remain confident that we are well positioned, via our multi-pronged growth strategy, to deliver strong results well into the future.”

Nasser Al Awadhi, Group CEOI, said, We had a very successful start into 2023 , maintaining our growth momentum by delivering a 54% growth in net income to AED 1.1 billion, a record revenue of AED 2 billion and a ROE of 23.4%. The positive performance underscores our commitment to delivering the very best products and services to our customers and long-term value for our shareholders. Our focus on investment and innovation, vigilant risk and controls framework, and growing balance sheet allowed us to produce these strong returns.

“All of our business lines continued to generate solid growth this quarter. In the retail banking group, consumer spending remained healthy with card sales up 45% and 11% growth in customer financing. In the Wholesale Bank, we were able to grow financing by 15% as a result of strong momentum in deal execution. This growth was driven by demand from existing large corporates as well as new to bank customers.

“From a capital perspective, our capital adequacy ratio of 17.54% is well above the minimum regulatory thresholds, allowing us to sustain our growth benefiting from our strong liquidity and funding position with a 28% growth in customer deposits to AED 142 billion.

“We continued to make necessary investments in our people, processes, and digital infrastructure across our network, to enable future productivity and efficiency gains. Our cost to income ratio improved 5.3 percentage points to 35.7%.

“Internationally, we continued to strengthen our presence in the markets we exist in including Egypt that remains a strategically important market for the Group, as we continued to focus on unlocking opportunities there through specialised offerings and innovative solutions, and by strengthening our footprint.

“Despite operating in the region’s most competitive banking environment, we believe ADIB is well positioned to take advantage of the UAE’s economic development and diversification, ensuring that our financial strength and focus on innovation delivers a compelling offering to customers. We cannot ignore that global economic uncertainties remain, and that there are concerns about the pressures of a rising rate environment on major segments of the UAE economy. We will therefore maintain our conservative approach to balancing the risk and reward of new credit extension while simultaneously building our capital.”

Mohamed Abdelbary, Group Financial Officer, added, “ADIB produced another solid set of results in the first quarter of 2023 with a net profit of AED 1.1 billion, up 54% from last year, underpinned by 45% growth in revenues. Margins widened by 79 bps to 4.35% in Q1 2023 as base rate rises benefited our finance portfolio, offsetting an increase in funding costs.

“Underlying operating performance was strong as we saw growth across all our business segments particularly with customer financing expanding 19% year-on-year.

“Deposit mix also improved with Current and Savings Accounts (CASA) growing 15% adding AED 12.5 billion to represent 68% of total customer deposits. In an increasing rate environment, this places us in good stead to deliver higher returns for the rest of the year.

“Fee income remained strong and represents 15% of total income demonstrating healthy pipeline execution across the business, in addition to increased client flow activities in cards and wealth management, which helped partially offset softer trading and investment income.

“We also maintained adequate provision buffers with a coverage ratio at 129% with collaterals, while prudently managing risk across the Group. Our balance sheet fundamentals remain solid across liquidity, funding and capital ratios, with Common Equity Tier 1 ratio at 12.55% as of Q1 2023.”