Adib Q3 profit gains 5.5% on more customers

Abu Dhabi Islamic Bank (Adib) on Sunday beat analysts' estimates, posting a 5.5 per cent rise in third-quarter net profit as it was boosted by higher revenues from a larger customer base.

The results mark the end of a mixed reporting season for banks in the UAE, as while some lenders continued to post rising earnings, others began to show signs of impact from the lower oil price on the Gulf country's economy and constrained liquidity within the banking sector.

Abu Dhabi's largest Sharia-compliant bank made a net profit of Dh503.2 million ($137 million) in the quarter ending Sept. 30, compared with Dh476.8 million in the same period a year ago, it said in a statement.

Analysts at Beltone Financial and EFG Hermes forecast net profit for the period of Dh480 million and Dh498.5 million respectively.

"Despite a more challenging operating environment and the increasing competition among banks in the UAE, we have seen continued growth in our customer numbers," said Tirad al-Mahmoud, Adib's chief executive.

The number of active customers served by Adib increased by more than 100,000 year-on-year to 855,468, the statement said.

Much of this can be attributed to Adib's acquisition of Barclays' UAE retail business, completed in September 2014, which it said at the time would see around 110,000 customers transfer to the Abu Dhabi lender.

The larger customer base helped revenue in the third quarter increase 9.7 per cent year on year to Dh1.28 billion. Net customer financing grew 7.8 per cent year-on-year to Dh77.2 billion.

Revenue growth also offset a 3.3 per cent increase in provisioning, with the bank setting aside Dh193 million for bad loans in the three months to the end of September.

Adib, which raised Dh504 million in a rights issue in September that was nearly three times covered by subscriptions, had a total capital adequacy ratio of 14.7 per cent at the end of the third quarter, according to the statement.

This figure, with a higher figure being a stronger indication of a bank's health, compares with an average in the UAE banking sector of 18.3 per cent at the end of June, according to the latest central bank data.

Mahmoud told Reuters last month it has no current plans to raise more capital after a rights issue last month, adding it would eschew expansion to focus on existing markets

 

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