ADCB increases profit, and bigger dividend should follow

Abu Dhabi Commercial Bank says its profit advanced by 29 per cent in 2013 on lending growth and a decline in bad loans.

Mona Al-Marzooqi / The National

Abu Dhabi Commercial Bank, the state-owned lender controlled by the Abu Dhabi Investment Council, said its profit rose by two-fifths in the fourth quarter and by 29 per cent for the year as a whole.

It credited an increase in borrowing and deposits, and a decline in bad loans.

Annual profit rose to Dh3.62 billion from Dh2.81bn and earnings per share advanced to 59 fils from 45 fils in 2012, the bank said. Net loans and advances gained 7 per cent to Dh132bn and customer deposits gained 6 per cent to Dh115bn. The non-performing loan ratio improved to 4.1 per cent from 5.4 per cent at the end of 2012, the bank said.

“In a persistently challenging economic environment, we laid the strategic foundations for future growth and profitability by striking a balance between ambition and discipline,” said Ala’a Eraiqat, the chief executive. “ADCB has a strong and conservative balance sheet that gives us the platform to accelerate business growth in the UAE. Throughout the year, the bank optimised the overall quality of the loan book to maximise return and minimise risks.”

The bank said its board had recommended a dividend of 30 fils per share, totalling Dh1.56 billion, subject to approval by the Central Bank. The dividend per share would be an increase from last year’s 25 fils per share.

In the fourth quarter alone, profit increased 40 per cent to Dh879 million from Dh628m a year earlier, the bank said. That beat the estimate of five analysts polled by Reuters, who on average predicted a net income of Dh783.5m for the fourth quarter.

“ADCB’s fourth-quarter earnings came in ahead of our expectations, with key earnings drivers such as loan growth and provisioning depicting strong positive trends,” said Shabbir Malik, a Dubai-based bank analyst at the Egyptian investment bank EFG-Hermes. “Loan growth was very impressive at 9.5 per cent quarter-on-quarter, coming after a weak third quarter in 2013 where the loan book shrunk due to a large repayment.”

Banks have been one of the main beneficiaries of the UAE economic recovery, which began in earnest last year amid rebounding property prices and improved business confidence. Standard & Poor’s said last week that the economy was likely to continue growing this year as credit growth remained strong.

“The UAE market continues to remain intensely competitive, yet the prospects of economic growth in 2014 are promising,” Mr Eraiqat said. “We will take advantage of future improvements to capitalise on value-adding opportunities for our shareholders and to contribute to the UAE economy as a whole.”

Shares of ADCB rose by 118.5 per cent last year and are up 1.5 per cent so far this year. Yesterday, the shares fell 1.5 per cent to Dh6.6 each.