Wednesday, July 28, 2021

Abu Dhabi Commercial Bank reports rise in Q2, 2021 net profit

DUBAI: Abu Dhabi Commercial Bank (ADCB), the UAE’s third-biggest lender, reported a jump in second-quarter net profit on Sunday and said it was optimistic about the turnaround of troubled hospital operator NMC, to which it was heavily exposed.

Net profit between April and June amounted to 1.4 billion dirhams ($381.22 million), a 14 per cent increase year-on-year and a 25 per cent increase quarter-on-quarter.

“The growth in net profit is a result of the increase in a diversified revenue stream, disciplined cost control and a prudent approach to risk management,” Chairman Khaldoon Al Mubarak said in a statement.

NMC exposure

ADCB posted a 25 per cent drop in net profit last year as it booked significantly higher provisions for NMC, which went into administration last year after months of turmoil following questions over its financial reporting and the discovery of undisclosed debt.

ADCB had nearly $1 billion in lending exposure to the group, which is set to soon obtain creditor approval for a reorganisation of the business.

“The bank is confident that the provisions it has recorded for NMC are sufficient and appropriate,” CEO Ala’a Eraiqat said.

ADCB was among a group of lenders which last year provided a $325 million facility to fund NMC’s administration and pave the way for restructuring.

Partly because of that facility, which gave creditors a super senior status, the bank said it was well positioned to maximise recoveries.

ADCB’s non-performing loan ratio improved to 5.86 per cent in the second quarter from 6.53 per cent in the first three months of this year, but was 70 basis points higher year on year.

Impairment charges of 678 million dirhams in the second quarter were 1 per cent higher year-on-year and 4 per cent lower quarter-on-quarter, it said.

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