Abu Dhabi Islamic Bank earns record quarterly net profit of $274.9m

Bank reports nearly 105% annual growth in third-quarter net profit

Abu Dhabi Islamic Bank’s revenue for the January-September period jumped 10 per cent on an annual basis. Getty

Abu Dhabi Islamic Bank, the emirate’s biggest Sharia-compliant lender, reported its highest quarterly net profit of more than Dh1 billion ($274.9 million) in the third quarter of 2022 driven by growth across all key businesses.

The bank recorded nearly 105 per cent year-on-year rise in net profit compared with the prior year period when it earned Dh493m in net profit, ADIB said in a statement to Abu Dhabi Securities Exchange, where its shares trade.

The bank registered annual growth of 53 per cent in net profit in the first nine months of the year to over Dh2.4bn from Dh1.6bn in the corresponding period of last year.

Revenue for the January-September period jumped 10 per cent to more than Dh4.5bn compared to Dh4bn last year.

This growth was driven by 22 per cent increase in fees and commissions and 10 per cent growth in funded income to Dh2.8bn, achieved from the growth in customer financing and higher rates, the bank said.

“These strong results, along with our positive outlook for the local economy, will enable us to accelerate our investments supporting our next stage of growth,” said Jawaan Al Khaili, chairman of ADIB.

“As we look ahead we will continue to work towards creating value for all our stakeholders as we aim to become the world’s most innovative Islamic bank. We are confident in the economic outlook for the UAE and the region, and will look to accelerate our progress for both customers and shareholders alike,” he added.

The bank said its impairments dropped by 53 per cent yearly to Dh352m for the first nine months of 2022, reflecting an overall improvement in economic conditions.

Total assets increased 10 per cent on an annual basis to reach Dh147bn, driven by a 16 per cent growth in gross financing and 42 per cent in investments. Customer deposits rose 11 per cent year-on-year to Dh119bn from strong current and savings accounts, ADIB said in a statement.

Higher interest rates and a broad-based recovery of the UAE’s economy from the Covid-19 pandemic-induced slowdown are expected to boost the profitability of the UAE lenders, Egyptian investment bank EFG Hermes said in a recent report.

The expected rise by 300 basis points (bps) in US interest rates will drive up the net interest income of lenders, the bank said in a report on the UAE banking sector.

A 25 bps rate increase translates into a net interest margin expansion of about 5 bps and earnings per share growth of 3 per cent for lenders.

“Looking ahead and while the global economic outlook remains uncertain marked by inflationary pressures, we are confident that our strong balance sheet, capital levels and liquidity combined with our innovative and agile spirit will position us well to capture new opportunities,” Nasser Al Awadhi, group chief executive of the bank, said.

“We will continue to identify new growth areas and invest our resources to deliver sustainable shareholder returns and pursue our growth and transformation plans,” he added.