Abu Dhabi Islamic Bank (ADIB) has reported a 16.6 per cent increase in fourth-quarter net profit despite a 39.5 per cent surge in provisions for bad loans during the same period.
The fourth-quarter net profit for the biggest Shariah-compliant lender in Abu Dhabi, rose to AED477.4m ($130.1m) for three months ending 31 December, compared with AED409m reported for the same period in 2014. Credit provisions for impairments for the fourth quarter climbed 39.5 per cent to AED249.3m, up from 178.7m a year earlier. The full-year credit provisions also went up 8.2 per cent to AED 820m, it said in a statement to Abu Dhabi Securities Exchange.
Total non-performing accounts, however, decreased by 5.3 per cent in 2015 to AED3.135bn. The bank also recorded an additional AED431.8m in specific provisions while increasing collective provisions by AED338.8m last year. Its total credit provisions, net of write-offs, now stands at AED2.995bn.
Despite improvement in the banks non-performing asset indicators and provision coverage ratios in 2015, the credit environment means that ADIB will continue to build collective provisions, Tirad al-Mahmoud, the group chief executive of ADIB said in the statement. We will take further specific provisions as is and prudent.
The bank reported an advances-to-deposit ratio of 82.6 per cent, an improvement from 86.1 per cent at the end of 2014. Consumer deposits in 2015 climbed by 12 per cent to AED 94.9bn, with Central Bank placement at AED6.8bn and interbank positions at AED1.6bn, it said in the statement.
We remain concerned about the liquidity outlook as well as the increasing indications of credit stress in our markets, Al-Mahmoud said. These concerns, combined with focus on building and optimising the banks capital, saw customer financing growing at a conservative 7.4 per cent versus a 12 per cent increase in the deposits at the same time.
Despite the stress in banking system, ADIB said it remains liquid and has managed to pay $750m five-year senior sukuk without raising new financing from the capital markets.
The lender reported a 10.5 per cent growth in its full-year 2015 net profit to AED1.934bn. Its revenues last year also recorded a rise of 12 per cent to AED 5.134bn. Assets at the end of 2015 reached AED118.4bn, a 5.8 per cent year-on-year jump.
The board recommended 24.27 per cent cash dividend for 2015, which represents 39.8 per cent of the lenders full year profit.