x Abu Dhabi, UAESaturday 20 January 2018

Profits soar at Abu Dhabi Commercial Bank

Markets Update: Abu Dhabi Commercial Bank posts profits nearly double analysts' estimates, driven by higher margins.

Abu Dhabi Commercial Bank's profits almost doubled as it revealed strong figures.

The capital's second-biggest lender reported an 88.6 per cent increase in net profits for the third quarter to Dh607.5m. Analysts had expected profits of Dh332m.

"We are seeing good momentum in business whilst maintaining a disciplined approach to risk management," said Ala'a Eraiqat, the bank's chief executive.

The bank's net interest income soared 48.6 per cent to Dh1.2 billion, driven by a collapse in interest expense.

ADCB is among the UAE banks which fixes its interest rates on lending and deposits using a fixed "retail base rate", which does not reflect the expense of interbank lending.

Benchmark interbank lending rates, known as Eibor, fell during the first half of the year and have remained at historic lows throughout the third quarter, allowing ADCB to reap profits above market rates for bank deposits. Money paid servicing deposits to bank customers fell by more than a third to Dh427m.

Net loans and advances increased 5.7 per cent during the period to Dh124.2 billion. The bank reported a doubling of net income from Islamic financing to Dh36.3m, after it relaunched its Sharia-compliant operations.

During the quarter the bank completed its sale of a 25 per cent stake in RHB Capital Berhad, a Malaysian lender, by Aabar Investments, a strategic investment company.

The stake, bought for 5.9 billion Malaysian ringgit (U.S.$1.9 billion), was funded by an interest-free loan from Aabar's parent, International Petroleum Investment Company, a recent bond prospectus revealed.