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 statement 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 The National. “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. Last month, the Central Bank of the UAE said it will extend some support measures by six months until mid-2022 to back the country's continued economic recovery.
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, ADIB
The CBUAE estimates 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 more bullish the view and projects economic output to expand by 4.6 per cent. Last week, Tokyo-based MUFG said the UAE’s economy 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 took over 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”. In August, ADIB launched its digital-only bank to target technology-savvy Generation Z.
How to come clean about financial infidelity
- Be honest and transparent: It is always better to own up than be found out. Tell your partner everything they want to know. Show remorse. Inform them of the extent of the situation so they know what they are dealing with.
- Work on yourself: Be honest with yourself and your partner and figure out why you did it. Don’t be ashamed to ask for professional help.
- Give it time: Like any breach of trust, it requires time to rebuild. So be consistent, communicate often and be patient with your partner and yourself.
- Discuss your financial situation regularly: Ensure your spouse is involved in financial matters and decisions. Your ability to consistently follow through with what you say you are going to do when it comes to money can make all the difference in your partner’s willingness to trust you again.
- Work on a plan to resolve the problem together: If there is a lot of debt, for example, create a budget and financial plan together and ensure your partner is fully informed, involved and supported.
Carol Glynn, founder of Conscious Finance Coaching
Cryopreservation: A timeline
- Keyhole surgery under general anaesthetic
- Ovarian tissue surgically removed
- Tissue processed in a high-tech facility
- Tissue re-implanted at a time of the patient’s choosing
- Full hormone production regained within 4-6 months
THE DETAILS
Solo: A Star Wars Story
Director: Ron Howard
2/5
How to donate
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
FA Cup fifth round draw
Sheffield Wednesday v Manchester City
Reading/Cardiff City v Sheffield United
Chelsea v Shrewsbury Town/Liverpool
West Bromwich Albion v Newcastle United/Oxford United
Leicester City v Coventry City/Birmingham City
Northampton Town/Derby County v Manchester United
Southampton/Tottenham Hotspur v Norwich City
Portsmouth v Arsenal
THE SPECS
Engine: 1.5-litre, four-cylinder turbo
Transmission: seven-speed dual clutch automatic
Power: 169bhp
Torque: 250Nm
Price: Dh54,500
On sale: now
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
MATCH INFO
Uefa Champions League, semi-final result:
Liverpool 4-0 Barcelona
Liverpool win 4-3 on aggregate
Champions Legaue final: June 1, Madrid
Awar Qalb
Director: Jamal Salem
Starring: Abdulla Zaid, Joma Ali, Neven Madi and Khadija Sleiman
Two stars
FIXTURES (all times UAE)
Sunday
Brescia v Lazio (3.30pm)
SPAL v Verona (6pm)
Genoa v Sassuolo (9pm)
AS Roma v Torino (11.45pm)
Monday
Bologna v Fiorentina (3.30pm)
AC Milan v Sampdoria (6pm)
Juventus v Cagliari (6pm)
Atalanta v Parma (6pm)
Lecce v Udinese (9pm)
Napoli v Inter Milan (11.45pm)
How it works
1) The liquid nanoclay is a mixture of water and clay that aims to convert desert land to fertile ground
2) Instead of water draining straight through the sand, it apparently helps the soil retain water
3) One application is said to last five years
4) The cost of treatment per hectare (2.4 acres) of desert varies from $7,000 to $10,000 per hectare
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The Buckingham Murders
Starring: Kareena Kapoor Khan, Ash Tandon, Prabhleen Sandhu
Director: Hansal Mehta
Rating: 4 / 5
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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LIVING IN...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
RACECARD%20
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Groom and Two Brides
Director: Elie Semaan
Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla
Rating: 3/5
