Abu Dhabi Islamic Bank’s first-quarter net profit more than doubled as revenue rose for the biggest Sharia-compliant lender in the emirate and impairment charges for loan losses dropped amid a continued economic recovery.
Net income for the three months through to the end of March surged to Dh607.6 million ($165.4m), a 125 per cent jump from the same period a year earlier, ADIB said on Sunday.
Revenue grew by 3.3 per cent from a year ago to Dh1.34bn, underpinned by a 30 per cent jump in non-funding income that helped offset the effects of a low interest rate environment.
Net impairment charges fell by 65.5 per cent to Dh133.5m at the end of first quarter, “reflecting improvements in the micro- and macroeconomic outlook”, the lender said.
“We have made a strong start to 2021, in what continues to be an uncertain economic environment related to the Covid-19 pandemic,” said ADIB chairman Jawan Al Khaili.
“This reflects our strong underlying performance across our all our businesses, partially driven by a rapidly improving economy which allowed us to decrease our impairment [charges].”
The quarterly performance was also underpinned by “continued cost discipline”, a digital strategy that drove operating expenses down by 6.8 per cent to Dh592m.
ADIB’s cost-to-income ratio for the period improved by 482 basis points.
“Sustained business momentum and targeted strategic initiatives, which partially offset the headwinds from record low rates, and the overall economic slowdown brought about by the pandemic” also helped to improve profitability, said Mr Al Khaili.
Government measures to soften the impact of the pandemic and a rapid Covid-19 vaccination campaign have hastened the UAE’s economic recovery.
Last month, the UAE Central Bank extended parts of its Targeted Economic Support Scheme, a zero-cost loan initiative aimed at boosting liquidity in the banking system – until the end of June 2022.
Overall, the UAE has unveiled economic support packages worth at least Dh388bn since the onset of the pandemic.
ADIB added almost 88,000 new customers in the 12 months through to the end of March 2021.
Gross customer financing grew by 5.5 per cent from a year ago, driven primarily by an 11.2 per cent increase in wholesale banking, the lender said.
Customer deposits grew by 4 per cent to Dh103.1bn while total assets was up 6.5 per cent at Dh130.7bn.
“Looking ahead and despite ongoing uncertainties, we believe that the UAE economy has the potential to have extremely robust, multi-year growth,” said Mr Al Khaili.
“Against this backdrop, we believe we are well-positioned for a period of sustained growth in 2021.”
