ADIB reports 'strong recovery' in second-half profits in 2020

Cost savings have created capacity for further investments in digital technology, chief financial officer says

Abu Dhabi Islamic Bank's total assets grew 1.5 per cent to Dh127.8 billion at December 31, 2020. Dana Smillie for The National

Abu Dhabi Islamic Bank reported a "strong recovery" in net profit during the second half of the year as revenue grew 10 per cent on higher levels of economic activity, but overall profit for the full-year remained 38 per cent lower after a first half disrupted by the Covid-19 pandemic.

Group net profit for the year stood at Dh1.6 billion, down from Dh2.6bn in the prior year. Full-year revenue was 9.4 per cent lower at Dh5.35bn.

"In an incredibly challenging year brought upon by the global Covid-19 pandemic, ADIB demonstrated strength, resilience and adaptability," the lender's chairman Jawaan Al Khaili said in a statement to the Abu Dhabi Securities Exchange, where its shares trade.

"I am particularly pleased with the significant recovery in our second half performance, which saw the bank’s net profit grow by 73 per cent compared to H1 2020. This was made possible due to a robust, diversified business model, and the outcome of a rigorous cost discipline programme that offset the impact of net profit margin compression."

ADIB's net margin fell 74 basis points to 3.51 per cent, despite the lender managing to cut operating expenses by 7.7 per cent year-on-year as it implemented a range of cost-saving measures.

The lender has also been optimising its branch network and using artificial intelligence to streamline its processes, the company's group chief financial officer Mohamed Abdelbary said.

"Such cost synergies have created capacity for us to continue our investments in digital technologies, as well as other strategic initiatives that can enable the bank to attract new customers and accelerate its growth in 2021,” he added.

Total assets grew 1.5 per cent year-on-year to Dh127.8bn as loans to customers grew 2.8 per cent to Dh83.4bn, fuelled by an 8.6 per cent growth in corporate funding. Customer deposits stood at Dh101.3bn, with current and savings accounts growing 12.3 per cent to Dh89.3bn.

Provisions for impairments almost doubled to Dh1.31bn and non-performing assets increased by 42 per cent to Dh7.7bn.