Abu Dhabi Islamic Bank, the biggest sharia-compliant lender in the emirate, reported a 51 per cent surge in the fourth-quarter net income as provisions for loan losses fell and revenue rose amid the continued economic recovery. Net profit for the three-month period to the end of December climbed to Dh728 million ($198.4m) from a year earlier, ADIB said in <a href="https://www.adx.ae/English/Pages/NewsDetails.aspx?viewid=20220207144527-ADIB" target="_blank">statement </a>on Monday to the Abu Dhabi Securities Exchange, where its shares are traded. Quarterly revenue rose 3 per cent to Dh1.47 billion, from Dh1.43bn reported for the last quarter of 2020. Provisions for bad loans dropped 44 per cent to Dh203m. “All indicators are positive,” Mohamed Abdel Bary, ADIB group chief financial officer, told <i>The National</i>. “Everything is pointing in the right direction and the economy is opening up, which is good news for us.” ADIB’s full-year net profit also surged 45 per cent to Dh2.33bn, boosted by top-line growth and continued cost optimisation. Revenue for the 12 months to the end of December rose 4 per cent to Dh5.56bn, helped by a 9 per cent year-on-year increase in non-funded income to Dh2.22bn and 1 per cent growth in funded income to Dh3.34bn. “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,” Jawaan Al Khaili, chairman of ADIB, said. “Our strong performance in 2021 has allowed ADIB’s board to recommend an increase in its cash dividend payout by 51.2 per cent, representing 48.5 per cent of the year’s net profit.” The lender continued to maintain focus on cost discipline that led to an 8 per cent annual drop in operating expenses to Dh2.26bn. Its cost-to-income ratio improved 5.1 percentage points to 40.7 per cent. Impairments for the 2021 financial year declined 27 per cent annually to Dh954m, reflecting an overall improvement in economic conditions relative to the pandemic-impacted period. ADIB improved its provision coverage of non-performing financing including collaterals by 9.3 percentage points to 120 per cent. The drop in impairment charges last year was driven by lower provisions booked for ADIB's Dh1.38bn exposure to NMC Healthcare and Neopharma. “That’s the reduction you are seeing predominantly” Mr Abdel Bary said. Overall, he expects ADIB’s cost of risk to normalise at current levels, and maybe to slightly improve, as the economy continues to recover. The UAE economy has bounced back strongly from the pandemic-driven slowdown in 2020, which pushed the global economy into its deepest recession since the 1930s. The Arab world’s second-largest economy has introduced fiscal and monetary stimulus worth Dh388bn that has supported the economic rebound. The economic stimulus includes the central bank's Dh50bn Targeted Economic Support Scheme (Tess) to boost liquidity in the banking and financial sector. <a href="https://www.thenationalnews.com/business/2021/12/18/uae-central-bank-to-extend-some-support-measures-until-june-2022/">Last month</a>, the <a href="https://www.thenationalnews.com/business/economy/2021/09/23/uae-central-bank-is-committed-to-recovery-and-a-gradual-withdrawal-of-support-measures/">Central Bank of the UAE</a> said it will extend some support measures by six months until mid-2022 to back the country's continued economic recovery. The CBUAE <a href="https://www.centralbank.ae/sites/default/files/2021-09/QER%202021%20Q2%20-%20Economic%20Review%20-%20September%2022nd.pdf">estimates</a> the UAE economy to grow at 4.2 per cent in 2022, higher than its 3.8 per cent previous forecast. Emirates NBD has a <a href="https://www.thenationalnews.com/business/economy/2021/09/22/uae-economy-to-grow-21-in-2021-on-continued-recovery-from-pandemic-driven-slowdown/">more bullish the view</a> and projects economic output to expand by 4.6 per cent. Last week, Tokyo-based <a href="https://www.thenationalnews.com/business/economy/2022/02/03/gcc-economies-set-to-grow-at-fastest-pace-in-a-decade-on-higher-oil-prices/">MUFG said the UAE’s economy</a> is expected to grow by 4.9 per cent amid rising oil prices. “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,” Mr Al Khaili said. “While the global economic picture is uncertain, we can mitigate volatility by remaining committed to maintaining our best practice approach to risk management.” Credit quality and capital strength “lie at the core” of the bank's success and it will continue to focus on that, he added. ADIB's gross financing rose 7 per cent to Dh93bn in 2021 and it aims to achieve the same growth in loan book this year as well, Mr Abdel Bary said. “We will probably do anything between 7 per cent and 10 per cent easily and we would like the retail bank to contribute more,” he said. “Corporate book has grown actually in double digits but it was more on the government side and public sector.” Customer deposits during the 12-month period grew 8 per cent to Dh110bn and total assets jumped 7 per cent to Dh137bn, a percentage the bank aims to achieve this year as well, he added. ADIB, which added 116,000 new customers last year, knows the market has “good potential and we can still gain further market share”, Nasser Al Awadhi, who <a href="https://www.thenationalnews.com/business/banking/2021/11/16/adib-appoints-nasser-al-awadhi-as-group-ceo/">took over</a> as ADIB's group chief executive in November, said. “I will also be focusing on delivering our five-year strategic plan by focusing on launching new products … attracting new business segments where we can grow profitably.” ADIB is also planning to launch a dedicated asset management business as demand for services from institutional and high-net-worth clients rises. “We are putting more and more focus on asset management business, which is a good unfunded income stream … it is capital light and we do have the clients' appetite,” Mr Abdel Bary said. “We have a huge sukuk business and we have third-party providers who help with that part of the wealth management proposition, and now it is time for us to take it to the next level.” The bank will also continue to invest in its digital transformation strategy to become a “digital-first financial institution”. <a href="https://www.thenationalnews.com/business/money/2021/08/23/adib-rolls-out-digital-only-bank-for-tech-savvy-generation-z/">In August</a>, ADIB launched its digital-only bank to target technology-savvy Generation Z.