ADCB Reports AED209 Million In Q1 Net Profit
Abu Dhabi Commercial Bank PJSC (ADCB) today reported net profit of AED209 million for Q1- 2020.
Announcing its financial results for the first quarter of the year, today the bank said the net interest and income from Islamic financing increased 6 percent year on year to AED 2.789 billion on account of improved cost of funds. Interest expense² improved 29% year on year to AED 1.606 billion. This reflects the resilience of the ADCB franchise despite the difficult environment due to Covid-19 and low oil prices in the latter part of Q1-2020.
In a press statement, ADCB said that its operating profit, excluding integration costs, "increased 8 percent year on year to AED2.293 billion, primarily driven by cost synergies and higher revenues.
"Operating expenses excluding integration costs decreased 7 percent year on year to AED1.183 billion. The cost-to-income ratio excluding integration costs improved to 34.0% from 37.3% a year earlier, an improvement of 327 basis points (3.27%), supported by the Bank’s disciplined cost control and realisation of cost synergies," said the statement.
Commenting on the Bank’s performance, Ala’a Eraiqat, Group Chief Executive Officer and Board Member said: "In the face of the unprecedented economic and social challenges presented by COVID-19, ADCB’s priority is to support customers, employees, business partners and communities above all other matters. The Bank is leveraging its financial strength and expertise to play its role to respond to the current global emergency, in line with the policies and initiatives of the Government and the Central Bank of the UAE."
"ADCB was the first bank in the UAE to roll out a comprehensive programme of relief measures for customers, which include deferment of loan instalments, fee reductions and waivers, rescheduling of working capital facilities and temporary interest rate reductions for businesses. Over 32,000 customers have received deferrals under the TESS scheme to date. The Bank has also invested a total of AED 9 million to support distance learning for students and to express gratitude to frontline healthcare professionals," he added.
The bank said it completed an end-to-end integration in Q1’20 ahead of schedule and below budget.
"Full integration of UNB and Al Hilal Bank into ADCB was completed in an accelerated timeframe of 11 months, less than half the initial target. Run-rate synergy target revised to AED 1 billion from AED 840 million. The Bank has realised AED 185 million of synergies in Q1’20 and is on track to capture 75% of the revised target in 2020, with full target scheduled to be realised in 2021 as planned.
"Final integration milestone completed seamlessly on 2 April 2020, including the unification of banking systems and migration of former UNB accounts to the ADCB platform. This was achieved with 90% of teams working remotely, an experience that opens up potential new avenues for enhancing our business operating model in future. The Bank has completed the purchase price allocation (PPA) exercise related to the merger as planned. In response to the current economic situation, ADCB is targeting further cost reductions through procurement efficiencies, process optimisation and elimination of certain expenses," the statement explained.
"The positive operating performance in the first quarter was the result of a successful integration process that was completed in only 11 months, less than half the initial target and surpassing regional benchmarks. As a fully unified and resilient banking group, ADCB benefits from a robust balance sheet, scale, efficiency and durable business model to weather the current turbulence in the global economy," it concluded.