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Abu Dhabi Commercial Bank PJSC reports

Abu Dhabi Commercial Bank PJSC (ADCB or the Bank) reported its financial results for the nine month period ended 30 September 2014 (9M’14).

Key highlights (30 September 2014)
Sustained profitability and strong operating performance

(9M’14 vs. 9M’13)
–Net profit up 16% to Dhs3.179bn
–Net profit attributable to equity shareholders up 18% to Dhs3.028bn
–Operating income up 2% to Dhs5.645bn. 9M’13 included a one-off gain of Dhs100m arising from retirement of hedges. Excluding the non-recurring gain, operating income for 9M’14 reported an increase of 3% and non-interest income reported an increase of 6% at Dhs1.452bn
–Net fees and commission income up 19% at Dhs896m

Significant improvement in cost of funds and efficiently managed cost base
–Interest expense improved 20% year on year to Dhs1.056bn in 9M’14
–Cost to income ratio was 32.8% in 9M’14 and remains within our target range

Consistent improvement in asset quality
–As at 30 September 2014, NPL and provision coverage ratios improved to 3.4% and 128.7% respectively, compared to 4.1% and 109.7% as at 31 December 2013
–Collective impairment allowance balance was 2.21% of credit risk weighted assets as at 30 September 2014
–Cost of risk was 0.52% for 9M’14, compared to 1.07% for 9M’13 and 0.90% as at 31 December 2013

Strong and conservative balance sheet providing a solid foundation to accelerate business growth
–Net loans and advances up 3% to Dhs136bn over 31 December 2013
–Customer deposits up 5% to Dhs122bn over 31 December 2013
–CASA deposits accounted for 47% of total deposits compared to 39% as at 31 December 2013

Strong liquidity and capital position at industry leading levels
–Capital adequacy ratio of 21.25% and Tier 1 ratio of 16.90%
–Net lender of Dhs16bn in the interbank markets
–Loan to deposit ratio improved to 111.8% from 114.1% as at 31 December 2013

The Bank delivered strong financial results for the nine month period of 2014, reporting a net profit Dhs3.179bn, up 16% from 9M’13. This represents an EPS of Dhs0.55 for 9M’14 versus Dhs0.43 for 9M’13.

Ala’a Eraiqat, Member of the Board and Chief Executive Officer, commented on the results: “The Bank’s strong performance with a record profit of Dhs3.179bn for the nine month period of 2014 reflects the emphasis we place on sustainable growth and our commitment to our strategic pillars. ADCB has a strong and conservative balance sheet that gives us the platform to accelerate business growth in the UAE and we continuously seek to capitalise on value-adding opportunities in key segments.”

Improving economic conditions combined with our strong risk management culture and disciplined approach to balance sheet management resulted in significant improvement in asset quality metrics year to date. Our capital is at industry leading levels, our liquidity remains strong and our cost of risk is at record low levels. In July 2014, global ratings agency Standard & Poor’s revised its outlook on ADCB to “Positive” and affirmed our ratings at ‘A/A-1’. The outlook revision is a reflection of our strong financial performance, tangible improvement in our funding profile, revenue generation and asset quality metrics. This is a testament to the work we are all doing as a team and reaffirms the steps we have taken to improve our financial performance since 2009. As we enter the last quarter of 2014, we remain positive and confident that our strong balance sheet will provide a platform for future growth,” he added.

Commenting on the results, Deepak Khullar, Group Chief Financial Officer said: “ADCB delivered double digit growth in net profit year on year, in line with the Bank’s well defined long-term strategy. For the nine month period to 30 September 2014, key drivers for growth included continued improvement in our funding profile, with cost of funds at 0.90%, robust fee income growth, up 19% year on year at Dhs896m and improvement in our asset quality, with total impairment charges at Dhs608m. For the nine month period of 2014, non-interest income was slightly lower year on year, on account of one-off gains reported in 2013 related to the retirement of hedges. Our cost to income ratio for the nine month period was 32.8% as we continue to invest in our people, infrastructure and systems to help us grow revenues.”