Abu Dhabi commercial bank 2011 1st half report

ADCB building Abu Dhabi Commercial Bank PJSC (“ADCB” or the “Bank”) today reported its financial results for the first half of 2011 (“H1’11”). Highlights •    Solid growth in operating income, diversified revenue streams: H1’11 vs. H1’10
−    Total operating income up 20% at AED 2,748 mn
−    Operating profit before impairment allowances and taxation up 19% at AED 1,761 mn
−    Net interest and Islamic financing income up 11% at AED 1,961 mn
−    Non-interest income* up 53% at AED 787 mn
−    Sale of stake in RHB Capital Berhad resulted in a gain of AED 1,314 mn in H1’11

*The Bank’s share of profit of associates presented below operating profit rather than a component of operating income as stated previously
•    Continued focus on conservative risk management:

−    Impairment allowances on doubtful loans and advances, net of recoveries amounted to AED 1,064 mn in H1’11, compared to AED 1,687 mn in H1’10
−    For the first half of the year, the Bank took an additional charge for portfolio impairment provision of AED  275 mn.  Portfolio impairment allowance of AED 1,918 mn represents 1.44% of credit risk weighted assets as at 30 June 2011
•    Strengthened capital adequacy, comfortable liquidity levels and improved loan to deposit ratio:

−    CAR strengthened to 21.2% compared to 16.7% as at 31 December 2010
−    Tier 1 ratio strengthened to 14.9% from 12.0% as at 31 December 2010
−    Liquidity ratio improved to 19.3% from 17.4% as at 31 December 2010
−    Loan to deposit ratio improved to 110% from 116% as at 31 December 2010

Commenting on the Bank’s performance, H.E. Eissa Al Suwaidi, Chairman of ADCB said: “I am pleased to report that the Bank has announced another successful set of results, in line with the UAE’s continued growth and economic development against a backdrop of a struggling global economy.  ADCB’s positive financial results in the first half of the year, demonstrates the Bank’s commitment to its strategic pillars which resulted in providing shareholders with real value.”
Ala’a Eraiqat, member of the Board and Chief Executive Officer, commented on the results: “Over the first half of the year, we have succeeded in delivering both top and bottom line growth, whilst maintaining a conservative approach to risk management.  This was reflected in the increased portfolio impairment provisions of AED 275 mn for the first half of the year, taking the net portfolio impairment allowance to AED 1,918 mn as at 30 June 2011, 1.44% of the credit risk weighted assets.  We have maintained our disciplined approach to risk management and focused on delivering our strategic objectives to maximize shareholder return and build a stronger, more robust ADCB.
In the second quarter of 2011, in line with our UAE centric growth strategy, ADCB agreed to sell its stake in RHB Capital Berhad in Malaysia to focus on operations in the UAE.  The sale of ADCB’s stake in RHB contributed significantly to our profitability for the quarter and more importantly resulted in improvement of the Bank’s capital adequacy and liquidity levels.  As a consequence of our improved capital position, Standard & Poor’s increased the Bank’s rating to A/A-1 in June 2011.”
The Bank also today announced that it would convene an EGM of shareholders and approach all relevant regulatory authorities, to request permission to buy back up to 10% of its capital.