Falling income, rising expenses hit ADCB
BANK RAISES FORECAST FOR COST SYNERGY BENEFITS
Abu Dhabi Commercial Bank (ADCB) reported yesterday a 13 per cent decline in profits for the third quarter of 2019 as income dropped and expenses inched higher.
Net profit reached Dh1.4 billion in the quarter, bringing profits in the first nine months of 2019 to Dh4.2 billion, down 14 per cent year-on-year.
The bank also said it expects to see Dh840 million in cost benefits from its merger, an upwards revision from the Dh615 million projected earlier. It did not elaborate on where the added benefits will come from, but said they will be realised by the end of 2021. This comes after the bank merged with Abu Dhabi’s Union National Bank and then acquired Al Hilal Bank in May 2019.
The profits for the third quarter are for the newly-created entity and are in comparison to the total earnings of the three separate banks in the same period last year.
During the quarter, net interest and Islamic financing income fell by 9 per cent to Dh2.5 billion. Non-interest income rose by 3 per cent to Dh749 million, driven by higher fees and commission income as well as higher trading income.
Alaa Eraiqat, group chief executive officer of ADCB, said the earnings came amid a “challenging economic environment, marked by muted credit growth.”
Loans and deposits
Both loans and deposits declined at the end of September, with net loans at Dh249.5 billion, down 1 per cent quarteron-quarter. ADCB said the decline in loans was due to an increase in corporate repayments. Meanwhile, deposits from customers fell by 4 per cent to Dh262.5 billion.
The bank said it continued to exit time deposits while focusing on current and savings account deposits.
“We remain positive on the long-term outlook for the UAE economy, which will be driven by continued investment in social and economic initiatives to promote sustainable growth,” the CEO said in a statement.
Discussing the merger of the banks, ADCB said that the integration of Al Hilal Bank is now complete, and that it expects full integration of all three banks to be completed by the second quarter of 2020. The last phase of the integration will involve subsidiaries and overseas branches, as well as unifying systems and technology infrastructure.
Integration costs so far amounted to Dh217 million, and are in line with the total integration expenditure of Dh980 million, the bank said.