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.
French business
France has organised a delegation of leading businesses to travel to Syria. The group was led by French shipping giant CMA CGM, which struck a 30-year contract in May with the Syrian government to develop and run Latakia port. Also present were water and waste management company Suez, defence multinational Thales, and Ellipse Group, which is currently looking into rehabilitating Syrian hospitals.
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Super Rugby play-offs
Quarter-finals
- Hurricanes 35, ACT 16
- Crusaders 17, Highlanders 0
- Lions 23, Sharks 21
- Chiefs 17, Stormers 11
Semi-finals
Saturday, July 29
- Crusaders v Chiefs, 12.35pm (UAE)
- Lions v Hurricanes, 4.30pm
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
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THREE
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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 Birkin bag is made by Hermès.
It is named after actress and singer Jane Birkin
Noone from Hermès will go on record to say how much a new Birkin costs, how long one would have to wait to get one, and how many bags are actually made each year.
UK's plans to cut net migration
Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.
Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.
But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.
Language requirements will be increased for all immigration routes to ensure a higher level of English.
Rules will also be laid out for adult dependants, meaning they will have to demonstrate a basic understanding of the language.
The plans also call for stricter tests for colleges and universities offering places to foreign students and a reduction in the time graduates can remain in the UK after their studies from two years to 18 months.
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
'The worst thing you can eat'
Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:
Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.
Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.
Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.
Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.
Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.
Jeff Buckley: From Hallelujah To The Last Goodbye
By Dave Lory with Jim Irvin
