Abu Dhabi, 27 January 2020 – Abu Dhabi Commercial Bank PJSC (“ADCB” or the “Bank”) today reported its full-year financial results for 2019 (“FY’19”). The results below are based on the full-year pro forma financial statements for the combined entity, following the merger between ADCB and Union National Bank (UNB), and the subsequent acquisition of Al Hilal Bank, both on 1 May 2019.

  • Merger benefits materialising in Q4’19 through sustainable reduction of cost base
  • Q4’19 net profit at AED 1.048 billion and full year group net profit at AED 5.244 billion with double-digit annualised return on tangible equity of 11.2%.
  • Q4’19 operating income up 3% year on year to AED 3.293 billion on account of improved cost of funds
  • Q4’19 operating profit before impairment allowances up 6% year on year to AED 2.008 billion
  • Fourth quarter cost to income ratio (excluding integration-related costs) stood at 35.1% compared to 39.5% a year earlier, an improvement of 440 basis points (4.4%), supported by the Bank’s disciplined cost control and realisation of cost synergies ahead of plan
  • Following the merger, the Bank is continuing with a comprehensive purchase price allocation (PPA) process, which is expected to be completed by the first quarter of 2020
  • Resilient balance sheet and well diversified liability base, with CASA (Current and savings account) deposits crossing the AED 100 billion mark for the first time in Q4’19
  • Net loans at AED 250 billion and customer deposits at AED 262 billion as at 31 December 2019
  • CASA deposits increased by AED 7 billion (8% increase year on year) to AED 102 billion as at 31 December 2019. CASA deposits comprising 39% of total customer deposits compared to 33% a year earlier
  • Strong liquidity position, with loan to deposit ratio of 95.4% and liquidity coverage ratio (LCR) of 127.3%, well above the minimum LCR ratio of 100% prescribed by the UAE Central Bank
  • Capital adequacy ratio (Basel III) of 16.9% and common equity tier 1 (CET1) ratio of 13.5%, comfortable capital position to meet regulatory requirements as a Domestic Systemically Important Bank (DSIB)
  • NPL ratio of 3.2% and NPL ratio including net POCI (Purchase or originated credit impaired) assets of 4.53%
  • All planned 2019 integration milestones delivered within an ambitious timeframe
  • End-to-end integration on fast track for completion by Q2’20, preparation well advanced for implementation of full systems integration and operational readiness
  • Rapid integration progress to realise full run-rate synergy target of AED 840 million by the end of 2021. Synergies of AED 350 million already realised through optimisation of physical network, productivity enhancements and increased economies of scale
  • Successful roll out of ADCB brand across all physical and digital channels, as well as optimisation of network to 72 branches and over 450 ATMs on 6 October 2019, only five months after completion of merger
  • Al Hilal Bank activated its digital strategy which focuses on serving retail customers through digital channels, following 100% migration of Wholesale and SME customers to ADCB’s Islamic wholesale banking platform

∗ Subject to approval by shareholders at the Annual General Meeting

The Board of Directors has recommended a cash dividend of AED 0.38 per share, translating to a pay out of AED 2.644 billion, equivalent to 50% of pro forma net profit.

Commenting on ADCB Group’s 2019 performance, Eissa Mohamed Al Suwaidi, Chairman, said:

“2019 was a transformational year for the ADCB Group. The merger with Union National Bank and subsequent acquisition of Al Hilal Bank provided the enlarged group with the scale and efficiency required for a major UAE financial institution. The Bank, which now serves over 1 million customers, benefits from resilience and scale necessary to navigate continued challenges and the financial strength to take advantage of new growth opportunities.

The Bank’s robust fundamentals have been established through our commitment to best-practice governance, a proactive risk and compliance culture, and a high-performance environment. These have also contributed to an efficient and diligent approach to integration, which has already exceeded expectations in terms of timescale and synergies.

ADCB Group’s continued success remains closely aligned with the UAE’s economic development. Our UAE-centric strategy supports UAE’s vision for development. ADCB has consistently met Emiratisation targets set by the UAE Central Bank and UAE National staff continue to occupy key roles within the Bank’s senior management.

I would like to take this opportunity to thank His Highness Sheikh Khalifa Bin Zayed Al Nahyan, the UAE President and Ruler of Abu Dhabi, His Highness Sheikh Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, His Highness Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, and the UAE Central Bank for their continued support for ADCB and the future development of the UAE economy. I also extend my gratitude and appreciation of the Board to our shareholders, our valued customers, and the ADCB executive management team and employees for their continued dedication and commitment.”

Commenting on the Bank’s financial performance and strategic outlook, Ala’a Eraiqat, Group Chief Executive Officer and Board Member said:

“At the end of a momentous year, the ADCB Group has emerged as a larger and stronger bank, that has once again delivered a robust set of results amid a soft operating environment. The Bank has reported a full year net profit of AED 5.244 billion, delivering a return on average tangible equity of 11.2%.

Following the landmark combination between ADCB, UNB and Al Hilal Bank in May, we have moved ahead with an ambitious schedule for integration, while continuing to develop our people, businesses and technology, to ensure consistently high quality service for our customers.

We have created a high-performance platform that provides opportunities for UAE National talent and the Bank is committed to providing a pathway for Emiratis to senior leadership positions. The ADCB Group employs 1,479 UAE Nationals who occupy key roles at every level. The Bank has consistently exceeded the Emiratisation targets set by the regulators. The 48% Emiratisation rate at Al Hilal Bank is a reflection of our sustained commitment to achieve these goals.

Within only five months of legal completion of the merger, we rolled out the ADCB brand across all physical and digital channels, and optimised the combined network to provide 72 branches and over 450 ATMs across the UAE. Preparations for full systems integration are now at an advanced stage, which will allow the Bank to migrate all UNB customers to the ADCB platform by the end of the second quarter of 2020. Through meticulous preparation and effective implementation, we have met all our integration milestones so far and surpassed our efficiency targets. This

progress resulted in the upward revision in October of our full run-rate synergy target to AED 840 million, of which AED 350 million has already been realised.

The Bank is delivering excellent and seamless customer service throughout the merger and integration process. The AED 7.3 billion increase in CASA deposits over the year to AED 102 billion in a declining interest-rate and highly competitive environment is a significant achievement, and testament to the confidence that customers continue to place in ADCB.

Our fourth quarter results show that the benefits of the merger are already coming through in our financial performance, and the impact of synergies will increase as we complete full integration.  The Group has achieved a significant improvement in its cost to income ratio, which decreased by 440 basis points (4.4%) year on year to 35.1% in the fourth quarter of 2019. The Bank continues to retain tight control of one-off integration costs.

Our balance sheet remains resilient, with strong capital and liquidity positions. The post-merger reaffirmation of our credit ratings, of A+ and A by Fitch and Standard & Poor’s respectively, is a reflection of the Bank’s strong fundamentals and ability to navigate through the evolving banking and regulatory landscape.

The past year is a powerful demonstration of what the ADCB Group can accomplish with a clear strategy, a robust governance framework, and close collaboration. The Bank is future-ready, better placed than ever to rise to tomorrow’s challenges, and grasp the opportunities we are seeing in a rapidly transforming UAE economy.”