ADCB delivered a solid performance in the first quarter of 2022 reflecting improving economic conditions in the UAE, despite ongoing global uncertainty. Net profit increased 32% year on year to AED 1.483 billion – equivalent to a return on average tangible equity of 12.6%.

We are making strong progress in implementing our five-year strategy to drive further value creation through increased market share, continued de-risking of the loan portfolio and investment in new growth opportunities, with an emphasis on digital.

The Bank has continued to grow and diversify its loan book, with AED 13 billion of new credit extended in the first quarter. In line with our strategy, the Bank continued to focus on lending to Government and public sector entities, while exposure to real estate sector was further reduced during the quarter.

Meanwhile, investment in our digital technology has continued through the launch of 10 new enhancements in the first quarter. More than 1 million customers are now subscribed to our digital platforms, while our ‘Hayyak’ onboarding app registered a record number of approximately 57,000 new customers in a single quarter.

Our subsidiaries are also becoming key engines of growth. Al Hilal launched a 'super app' in February, providing a single platform for financial and lifestyle services. To date, the app has attracted over 40,000 registered users to its virtual marketplace, with more than 8,500 banking customers. ADCB Egypt has also recorded strong loan growth to achieve a 12% year-on-year increase in first quarter net profit in local currency terms.

In an important development for ADCB’s stakeholders, NMC Group’s core operations in the UAE and Oman completed a successful restructuring process and exited administration in March 2022. As a significant creditor, we have consistently been proactive in supporting the rescue and turnaround of the company. This approach has resulted in the Bank receiving 37.5% of a new USD 2.25 billion facility issued by NMC HoldCo SPV Ltd.  

As a major financial institution in the UAE, ADCB Group has a clear role to innovate and provide service excellence for our customers. We continue to invest in the business, inspired by the energy and spirit of our communities, exemplified by the economy’s rebound from the global pandemic and Expo’s success in welcoming the world to a vision of a positive, technology-enabled future.

+1 million 

SUBSCRIBERS TO DIGITAL BANKING PLATFORMS

c. 57,000

RECORD NUMBER OF CUSTOMERS ONBOARDED BY HAYYAK APP IN A QUARTER

ADCB achieved strong growth in first-quarter net profit, supported by a significant improvement in cost of risk to historically low levels and continued diversification of the loan portfolio.

The Bank has maintained a robust financial position through the global pandemic and   has successfully supported impacted customers. Impairment charges have progressively decreased as the economy has recovered -- and were 58% lower year on year in Q1’22 -- contributing to a 36 basis point improvement in risk-adjusted net interest margin.

We continue to further diversify the revenue mix and drive growth opportunities in areas such as digital banking, payments, as well as wealth and asset management. Net fees and commission income in the first quarter increased 10% year on year, driven by a substantial rise in trade finance commission as well as higher loan processing and card related fees.

During the first quarter, the Bank introduced a new ESG framework approved by the  Board of Directors. Sustainability has been integrated as a key pillar of corporate strategy, driven by a robust governance structure, with Board oversight and executive management accountability. Having completed a comprehensive materiality assessment, a dedicated and experienced ESG team is now helping to steer a detailed workplan across the organisation.

The Bank maintains robust capital and liquidity positions and we are well-placed to pursue opportunities for growth in 2022.

Q1 2022 FINANCIAL HIGHLIGHTS

 

 

Figures may not add up due to rounding differences

1 After share in profit of associates, overseas income tax charge, and profit/loss from discontinued operations

2 Provisions on loans and advances, including fair value adjustments

3 POCI: Purchase or originated credit-impaired financial assets 

4 For ROATE, net profit attributable to equity shareholders is considered, i.e., net profit after deducting interest expense on Tier I capital notes

KEY HIGHLIGHTS

Solid net interest income, rise in fee income and significant improvement in cost of risk resulting in 32% YoY rise in net profit

• Net interest income in Q1’22 was up 1% YoY to AED 2.146 billion, with an 8% increase in average interest earning assets partially offset by reduced yields, as the Bank adjusted its loan portfolio towards lower-risk assets. The 5% sequential decline was mainly due to lower interest in suspense reversals.
• Net interest margin (NIM) was 2.28% in Q1’22, while risk adjusted NIM improved by 36 bps YoY to 1.99%, reflecting the change in profile of the loan portfolio. Cost of funds was up 4  bps sequentially to 71 bps, on account of higher benchmark rates.
• Non-interest income decreased 2% YoY and 23% QoQ to AED 789 million. Net fees and commission income of AED 487 million was up 10% YoY mainly attributable to a significant increase in trade finance commission as well as higher loan processing and card related fees. Net trading income decreased 24% YoY  to  AED 117 million on account of lower  FX income and lower gains from trading securities, partially offset by higher derivative income.
• Operating expenses were 5% higher YoY to AED 1.118 billion on account of higher compensation costs and broad-based investment in the growth of the business, including in the areas of digital technology and regulatory compliance amid an increasingly inflationary environment. Cost to income ratio was 38.1%, an increase of 370 bps sequentially, with a 1% improvement in operating expenses offset by lower operating income.  
• Impairment charges improved significantly to AED 294 million, down 58% from Q1’21 and 56% from Q4’21, due to higher recoveries and improved economic conditions.
• The Group reported net profit of AED 1.483 billion in Q1’22, up 32% YoY, and 2% QoQ. Return on average tangible equity was 12.6%.

Extension of AED 13 billion in new credit in Q1’22

• The Group’s balance sheet remains strong, with total assets of AED 445.7 billion as at March-end, up 1% from Dec’21 and 13% from March’21.
• ADCB extended AED 13 billion to targeted economic sectors in line with our five-year growth strategy, while corporate repayments of AED 12 billion continued to reduce concentration risk in sectors such as real estate. The loan portfolio remains well balanced, with government and public sector entities comprising 26% of total outstanding loans, real estate investment accounting for 23%, and personal loans 21%. The average customer loan balance during the quarter was AED 241 billion.
• Total customer deposits stood at AED 261.9 billion at the end of March, up 10% YoY and 1%  lower sequentially. CASA deposits totaled AED 150.7 billion, accounting for 57.5% of total customer deposits, compared to AED 153 billion at the end of December. Average

CASA deposits were AED 150 billion in Q1’22, compared to AED 134 billion in Q1’21. The average deposit balance was AED 260 billion during the quarter.

• Total shareholders’ equity stood at AED 57.3 billion as at 31 March 2022. The Bank remains well capitalised, with capital adequacy (Basel III) and CET1 ratios of 16.02% and 13.03% compared to 15.97% and 12.94% respectively as at 31 December 2021.
• ADCB continues to maintain a comfortable liquidity position, with a liquidity coverage ratio (LCR) of 126.1% as at 31 March 2022, while the liquidity ratio stood at 31.1% and the loan to deposit ratio was 93.9%.
• The Bank was a net lender of AED 17 billion in the interbank markets as at March-end.

Significant improvement in cost of risk; successful conclusion to NMC restructuring with ADCB receiving 37.5% of USD 2.25 billion facility

• Cost of risk improved significantly to 30 bps in Q1’22 from 70 bps in Q4’21, and 84 bps in Q1’21, in line with medium-term guidance of 80 bps.
• The NPL ratio was 5.71% at the end of March, compared to 6.53% a year earlier and 5.41% in Dec’21. The sequential increase in stage-three loans was mainly due to a few corporate accounts. Including net POCI (purchase or originated credit impaired) assets, the NPL ratio was 7.10%.
• The provision coverage ratio was 86.9%, versus 87.8% in March’21 and 93.4% in Dec’21. The coverage ratio including collateral held was 141 % compared to 139% a year earlier.
• ADCB received 37.5% of transferable exit instruments in a USD 2.25 billion facility issued by NMC HoldCo SPV Ltd., a new holding company for NMC’s operations in UAE and Oman, following the successful completion of a debt restructuring process and exit from administration on 25 March 2022. Holders in NMC’s exit instruments will ultimately be repaid following monetisation of the business at a later stage and will therefore benefit from any further value creation at the NMC business.
• In accordance with ADCB’s rights related to the exit instruments issued by NMC, the Bank has appointed three of the seven members of the board of the new company. The Board will work closely with the senior leadership team to embed a robust governance framework and implement a strategy for growth of the business.

Digital subscriptions exceeded key milestone of 1 million customers in Q1’22

• Digital transformation continues to drive service enhancements, greater customer engagement and operational efficiencies. ADCB launched a further 10 digital customer releases in Q1’22, taking the total to 103 since the inception of the digital transformation programme.
• Subscriptions to the Bank’s internet and mobile banking platforms increased by 16% year on year to more than 1 million customers at the end of Q1’22, with registered users of the ADCB Mobile Banking App up 24% to over 894,000. The ‘Hayyak’ onboarding app registered c. 57,000 new customers in Q1’22 – the highest achieved in a quarter -- representing 77% of total new-to-bank customers in the period.
• In Q1’22, 95% of retail transactions were conducted electronically and digital fund transfers were up 58% YoY.
• Transactions on Wholesale Banking’s ProCash and ProTrade platforms accounted for 97% all cash management transactions and 80% of trade finance transactions respectively. The ProCash platform has continued to facilitate self-service requests, through the digitisation of an additional 13 processes during Q1’22.
• New users on the Wholesale Banking Mobile App in Q1’22 were 200% higher year on year, while the Bank digitally onboarded close to 900 new customers in the commercial and mid-size corporate segment during the quarter.

Al Hilal ‘super app’ launched in February; ADCB Egypt recorded 12% YoY net profit growth in Q1’22

 ADCB Egypt delivered a strong performance in Q1’22, with a 15% YoY rise in customer numbers driving an increase in loans and deposits. The Bank’s growth continues to be underpinned by a digital transformation programme, which has resulted in a 17% YoY increase in the number of active users on the Bank’s digital platforms. In Q1’22, 67% of customer transactions were conducted digitally.

• Q1’22 net profit* of EGP 190 million, up 12% YoY, representing an ROE of 12.5%
• Net loans increased 16% QoQ to EGP 24.6 billion as at 31 March 2022
• Total deposits increased 9% QoQ to EGP 44.7 billion as at 31 March 2022

*Based on IFRS 

In February, Al Hilal rebranded and launched a new cloud-based digital platform that offers financial solutions and  a  wide  range  of  other  services  through  an  ecosystem  of partnerships. To date, super app has acquired over 40,000 registered users and recorded high daily engagement rates. Customer feedback has been positive, particularly for the family value proposition that provides a highly  differentiated  experience,  including gamified financial education for children. Al  Hilal  is  enhancing  the  banking and e-commerce product and service offering  on  the  app.  The  new  platform  builds on a track record of increasing digital engagement, with active users of Al Hilal’s digital platforms up 32% year on year in Q1’22, and registered subscribers increasing 40%.

Strong progress embedding ESG in the Bank’s strategy to support the transition to an inclusive, net zero economy

• Through its detailed sustainability strategy, ADCB is managing the business risks and opportunities across the material ESG topics that matter most to its stakeholders. The approach strengthens the Bank’s resilience, while harnessing opportunities to support customers transition to an inclusive, net zero economy.
• ADCB has undertaken extensive engagement with key stakeholder groups, including investors, customers, employees, regulators and other external parties, to review material topics for prioritisation. This has formed the basis for a new sustainability strategy, in accordance with international frameworks and industry best practice. Strategy implementation is being driven by a new Sustainability Team reporting to the Group CFO, with a remit that includes internal culture and harnessing business opportunities.
• Under the strategy, the Bank has integrated sustainability as a key pillar of the corporate strategy and revamped its Group-wide sustainability governance framework with Board oversight and executive management accountability. This includes linking executive remuneration to 2022 sustainability KPIs.
• In 2021, ADCB achieved an upgrade in its MSCI score for ESG to “AA” from “A”, while its ranking by Sustainalytics improved to “medium” risk.

ADCB Q1 2022 and 2021 awards

BEST TRADE FINANCE PROVIDER IN THE UAE

GLOBAL FINANCE

MOST HELPFUL BANK DURING COVID-19 IN THE MIDDLE EAST AND UNITED ARAB EMIRATES

ASIAN BANKER AWARDS 2021

MOST RECOMMENDED RETAIL BANK IN THE MIDDLE EAST AND UNITED ARAB EMIRATES

ASIAN BANKER AWARDS 2021

CUSTOMER HAPPINESS

GULF CUSTOMER EXPERIENCE GOLD AWARDS 2021

CUSTOMERS AT THE HEART OF EVERYTHING

GULF CUSTOMER EXPERIENCE GOLD AWARDS 2021

CX TEAM

OF THE YEAR

GULF CUSTOMER EXPERIENCE GOLD AWARDS 2021

OUTSTANDING DIGITAL ACCELERATION IN RESPONSETO COVID-19

MIDDLE EAST AND AFRICA RETAIL BANKING INNOVATION AWARDS

DIGITAL LENDING PRODUCT OF THE YEAR, VIA ADCB MOBILE BANKING APP

MIDDLE EAST AND AFRICA RETAIL BANKING INNOVATION AWARDS

BEST CUSTOMER ONBOARDING APP (ADCB HAYYAK)

ASIAN BANKER AWARDS 2021

BEST API INITIATIVE

MIDDLE EAST AND AFRICA RETAIL BANKING INNOVATION AWARDS

THE 2021INVESTOR IN PEOPLE

ISLAMIC RETAIL BANKING AWARDS (IRBA)

BEST FRICTIONLESS CREDITEVALUATION

MIDDLE EAST AND AFRICA RETAIL BANKING INNOVATION AWARDS

BEST ANNUAL REPORT IN THE MIDDLE EAST (PRINT CATEGORY)

MIDDLE EAST INVESTOR RELATIONS ASSOCIATION (MEIRA) AWARDS 2021

BEST SERVICE IN THE UAE

EUROMONEY CASH MANAGEMENT SURVEY

UAE DOMESTIC TRADE FINANCE BANK OF THE YEAR

ABF WHOLESALE BANKING AWARDS 2021

BRONZE AWARD

BEST INTERNATIONAL ANNUAL REPORT

ARC AWARDS 2021

ADCB EGYPT Q1 2022 and 2021 awards

BEST GRADUATE EMPLOYMENT PROGRAM FOR ADCB EGYPT'S ACADEMY

THE DIGITAL BANKER

BEST FINANCIAL INCLUSION INITIATIVE FOR INTEGRATING PEOPLE WITH DISABILITIES

THE DIGITAL BANKER

BEST DIGITAL TRANSFORMATION PROGRAM

THE DIGITAL BANKER

OUTSTANDING IT TRANSFORMATION

THE DIGITAL BANKER

FASTEST GROWING DIGITAL BANK

GLOBAL BUSINESS OUTLOOK AWARDS

FASTEST GROWING RETAIL BANK EGYPT 2022

WORLD BUSINESS OUTLOOK

BEST NEW BANK EGYPT 2022

WORLD BUSINESS OUTLOOK

FASTEST GROWING BANK EGYPT 2022

WORLD BUSINESS OUTLOOK

FASTEST GROWING CORPORATE BANK EGYPT 2022

WORLD BUSINESS OUTLOOK

Further information on ADCB can be found at adcb.com/ir or by contacting: