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Abu Dhabi Commercial Bank PJSC reports second quarter 2012 net profit of Dhs733m
(25 July 2012)


Abu Dhabi Commercial Bank PJSC reported its financial results for the second quarter of 2012 ("Q2’12").

ADCB reported first half 2012 net profit of Dhs1,535m compared to Dhs1,918m in H1’11. H1’11 net profit included Dhs1,314m gain on the sale of ADCB’s stake in RHB Capital Berhad in June 2011.

Net profit for the second quarter reached Dhs733m compared to Dhs1,335m in Q2’11 and Dhs802m in Q1’12, a decline of 9% over Q1’12.

Basic earnings per share for the first half of 2012 was Dhs0.26 compared to Dhs0.33 reported in H1’11.

As at 30 June 2012, for the first half of 2012 ROE was reported at 15.4% and ROAA at 1.56% compared to 14.2% and 1.31% respectively in H1’11.

Total operating income for the first half of the year reached Dhs3,353 mn, an increase of 22% year on year. On a quarterly basis, Q2’12 total operating income of Dhs1,769m was a record for the Bank and reflected an increase of 24% year on year and 12% over the previous quarter.

Total net interest and Islamic financing income for the first half of the year in 2012 reached Dhs2,578 mn, an increase of 31% over H1’11.

This strong growth was attributable to higher investment volumes coupled with the Bank’s improved funding profile. Interest expenses for the first half of the year recorded an improvement of 22% over H1’11, primarily as a result of carefully managed cost of funds and lower EIBOR.

In Q2’12, at Dhs1,383 mn, total net interest income and Islamic financing income recorded an increase of 34% year on year and 16% quarter on quarter. The improving trends increased the net interest margin to 3.52% in Q2’12 compared to 2.80% in Q2’11 and 3.02% in Q1’12.

Non-interest income in the first half of 2012 was at Dhs775 mn, 2% lower over H1’11. On a quarterly basis, at Dhs386 mn, non-interest income remained flat year on year and was 1% lower over Q1’12.

Operating expenses totaled Dhs1,042m in the first half of 2012, 6% higher compared to the corresponding period in 2011. Cost to income ratio improved to 31.0% in H1’12 from 33.8% in H1’11 driven by both improved top line momentum and through proactive cost management. On a quarterly basis, cost to income ratio improved to 30.4% in Q2’12, recording an improvement of 660 bps over Q2’11 and an improvement of 130 bps over Q1’12.

As at 30 June 2012, the NPL ratio was 4.7% and provision coverage was 86.3% compared to 4.6% and 80.0% as at 31 December 2011.

Portfolio impairment allowance balance was Dhs2,353m and 1.78% of credit risk weighted assets as at 30 June 2012 (UAE Central Bank directive requires banks to increase the level of collective provisions to 1.50% of credit risk weighted assets by 2014.) Individual impairment balance stood at Dhs3,733m as at 30 June 2012.

Net impairment allowance charge for the first half of 2012 was 42% lower at Dhs779m over the same period last year. Charges for impairment allowances on loans and advances, net of recoveries amounted to Dhs749m in H1’12, compared to Dhs1,064m in H1’11.

Provisions for the funded and unfunded investment portfolios totaled Dhs8m in H1’12, compared to Dhs270m in H1’11.

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