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ADCB profits down by 35 per cent.

Byline: (Staff Writer)

Abu Dhabi Commercial Bank (ADCB) has declared its full year results for 2008, saying that the total income of ADCB for 2008 was AED 4.42 billion ($1.1 billion), an increase of 16 per cent over 2007. Operating profit before provisions grew 3.6 per cent, and core profits, excluding extraordinary items and before provisions, increased seven per cent.

The bank said that total assets grew by 39 per cent with net loans and advances and customer deposits growing by 44 per cent and 48 per cent respectively. ADCB said that non-interest income now comprises 43 per cent of total income up from 40 per cent in 2007on the back of all round growth in fee, commissions FX and derivative income. FX and derivative income of AED 410 million ($111.6 million) grew 100 per cent over the previous year while core fees and commissions grew by 12 per cent.

The net profit for the year of AED 1.36 billion ($353.9 million), says the bank "was conservatively arrived at" and reflects increased general provisions in accordance with Central Bank's guidance (particularly Circular 204/2009) to all banks to maintain prudence in the preparation of their 2008 financial statements.

In line with this guidance, ADCB said it has included general provisions of AED 1.296 billion ($352.3 million) out of total provisions of AED 1.498 billion ($407.2 million). Of these provisions, loan provisions amount to AED 758 million ($206.2 million) and investment provisions amount to AED 740 million ($201.3 million). The general provisions are expected to cover potential loan and investment impairments taking into account uncertainties arising from the economic environment.

The bank's capital adequacy ratio remained at 11.6 per cent at year end. Capital and reserves including the convertibles were at AED 15.9 billion ($4.3 billion) up 40 per cent over the previous year.

Non-performing loans were AED 1.26 billion ($343 million) at the end of 2008 or 1.13 per cent (1.38 per cent for 2007) of total loans, an improvement over year end 2007and the lowest ratio ever between non-performing loans and gross loans. This improvement is despite the bank changing its NPL classification from 180 days past due to 90 days past due in line with Central Bank directives on Basel-II. Total provisions, excluding collateral values, now stand at 158 per cent (109 per cent for 2007) of NPLs. Total collective provisions now constitute 0.96 per cent of total performing loans.

The Board of ADCB recommended that the bank pay cash dividends equivalent to 10 per cent of its capital (AED 4.8 million/ $1.3 million)

Bond issue

In response to the Government of Abu Dhabi's initiative to inject additional capital into certain Abu Dhabi financial institutions, ADCB said that it will issue Tier 1 capital notes to the Government of Abu Dhabi, with a principal amount of AED 4 billion ($1 billion). The issuance of the notes was approved by ADCB's board of directors on 4 February.

The notes will bear interest at a rate of six per cent per annum payable semi-annually in arrear from (and including) the issue date for a period of five years, and thereafter at a floating rate, reset and payable semi-annually in arrear, reflecting the initial margin. The notes are non-voting, non-cumulative perpetual securities, and are callable subject to certain conditions. The bank's Tier I capital will improve to 14.7 per cent.

2009 CPI Financial. All rights reserved.

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Publication:CPI Financial
Article Type:Financial report
Date:Feb 8, 2009
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