ADCB acquires mortgage portfolio of Abu Dhabi Finance

The transaction is expected to provide further growth for ADCB’s retail and SME businesses

ADCB signed an agreement to acquire a portfolio of about 1,000 mortgages from Abu Dhabi Finance. Chris Whiteoak / The National

Abu Dhabi Commercial Bank, the UAE's third-largest lender, acquired a portfolio of about 1,000 mortgages from Abu Dhabi Finance as it looks to grab a wider share of the domestic home finance sector.

The portfolio had a gross value of Dh1.13 billion ($307.6 million) as of January 31, ADCB said in a filing to the Abu Dhabi Securities Exchange on Sunday.

Residential mortgages make up 76 per cent of the portfolio while commercial property finance deals account for the rest.

All the mortgages are conventional, with about half of the portfolio secured by property in Abu Dhabi, and the remainder distributed across Dubai and other emirates, the lender said.

“The acquisition of this collateralised portfolio expands our mortgage book, enhancing the diversification of our assets and customer base,” said Arup Mukhopadhyay, head of the consumer banking group at ADCB.

“The bank continues to invest significantly to provide a leading real estate finance offering.”

Hit by Covid-19 headwinds, regional lenders are looking to consolidate their market positions as they deal with the difficult operating conditions.

Several banks across the GCC have merged or intend to acquire the portfolios of other lenders to increase the scale of their operations.

The deal with Abu Dhabi Finance is expected to give ADCB’s retail and small and medium enterprise business a boost.

It will also increase the size of its home-finance business and introduce more customers to its mortgage products, ADCB said in the statement

Abu Dhabi Finance, which was established in 2008, is a conventional mortgage specialist.

Its customers are expected to transfer to the ADCB banking platform during the first half of this year, subject to the deal being approved by the UAE Central Bank and other relevant authorities.

ADCB said in September that it would exit its operations in China and also close its branch in Shanghai, which it inherited from Union National Bank after a three-way merger in 2019.

The bank also discontinued operations in Jersey in the UK last year and announced that it would sell most of its portfolio in India and exit the Kuwait and Qatar markets in 2019.

Last month, ADCB reported full-year profit of Dh3.81bn, down 27 per cent from Dh5.24bn in 2019, due to higher provisions.

Impairment charges for NMC Health Group, financial services company Finablr and its associated companies were part of the lender’s “prudent approach to provisioning” but they hit its balance sheet.

ADCB’s fourth-quarter net profit fell by 4 per cent from the previous year to Dh1.01bn.