ADIB expects its financing business to maintain market-beating growth in 2023

The lender, which delivered record quarterly and annual earnings, expects retail and mortgage segments to drive growth

ADIB is the biggest Islamic lender in Abu Dhabi by assets. Photo: ADIB

Abu Dhabi Islamic Bank, the biggest Sharia-compliant lender in the emirate by assets, expects to outpace the UAE banking sector's average financing business growth this year, driven by retail and mortgage lending amid the continued economic rebound in the country, the bank’s chief financial officer said.

ADIB last year outpaced the 5 per cent average financing growth recorded by the UAE’s banking market with “15 per cent average underlying financing and a 23 per cent [rise] on headline” basis growth.

The growth trajectory this year is expected to be sharp, albeit slightly lower than last year's levels, Mohamed Abdel Bary told The National in an interview.

“The growth trajectory will be there, the question will be by how much we will replicate the 2022 number,” he said.

“We are looking at probably 10 per cent growth year-on-year, which is a fair estimate, particularly looking at the [UAE’s] GDP outlook.”

Providing the right level of service and having a broad enough client base has helped ADIB outgrow the market average in financing growth, he said.

On Monday, the lender reported record annual and quarterly profit, amid a broader recovery in the UAE economy.

Net income for the three months to the end of December surged 56 per cent to Dh1.14 billion ($310.4 million).

ADIB’s full-year net profit surged by almost 55 per cent to Dh3.58 billion, the lender said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

Total assets increased 23 per cent year-on-year to reach Dh169 billion, driven by 22 per cent growth in gross financing to Dh113 billion.

Provisions for bad loans fell by more than 19 per cent to Dh769 million, another reflection of an overall improvement in economic conditions, the bank said.

The UAE economy made a strong rebound from the coronavirus-induced slowdown in 2021 and the pace of economic momentum continued to improve last year on the back of government initiatives and higher oil prices.

The Arab world’s second-largest economy is estimated to have grown by 7.6 per cent last year, the highest in 11 years, after expanding by 3.8 per cent in 2021, according to the UAE Central Bank.

For 2023, the Central Bank projected non-oil sector expansion of 4.2 per cent on the back of easing pandemic-related restrictions, a recovery in global travel and tourism, and the booming real estate and construction sectors. Overall, the country’s economy is projected to grow 3.9 per cent this year, it said.

Banks in the UAE have solid fundamentals and will continue to remain profitable, albeit at a slower rate this year, driven by fees and interest income amid higher interest rates, S&P Global Ratings said on Tuesday.

ADIB, which recorded a 43 per cent jump in its fees and commissions income last year, expects to see an additional Dh120 million in profitability with every 50 basis point increase in benchmark interest rates, Mr Abdel Bary said.

The lender expects its retail business, particularly mortgages, to drive growth this year. It is also looking to improve its retail financing mix by bringing more expatriate clients on board.

“We are quite heavy when it comes to UAE nationals, as almost 80 per cent to 85 per cent of our financing goes to UAE nationals,” he said.

“We would like to open up to more expatriates. That's one of the elements where we are focusing on strategically.”

ADIB’s Heliopolis branch in Egypt. The bank is also keen to expand its business interest in Saudi Arabia. Dana Smillie / The National

ADIB is also bullish on the prospects of its business in the Egyptian market, despite economic hiccups in the short term.

Earlier this month, the bank bought additional shares in its Egyptian subsidiary to boost its stake in the lender to more than 52 per cent.

It purchased 9.6 million shares from National Investment Bank, representing 2.4 per cent of ADIB Egypt's share capital.

ADIB is open to further consolidate its holding in its Egyptian franchise, if it sees an opportunity, Mr Abdel Bary said.

“It will be a bumpy ride for a while but we believe in the medium to long-term story of that country,” he said.

ADIB is also keen to expand its business interest in Saudi Arabia, the Arab world's largest economy.

It may consider consolidating its stake in a Saudi joint venture or start commercial operations in the kingdom.

“Everything is on the table,” he said.

ADIB is also open to acquire assets in the UAE, GCC and the broader Mena markets as long as they are “capital accretive” and make commercial sense, he said.