Abu Dhabi Commercial Bank · ADX:ADCB
Abu Dhabi Commercial Bank — Abu Dhabi Commercial Bank PJSC — Q3 2024 Earnings Presentation
52 slides from Abu Dhabi Commercial Bank's earnings presentation, November 2024
Slide 1: Third Quarter 2024 Investor Presentation
ABU DHABI COMMERCIAL BANK PJSC adcb.com/ir Third quarter 2024 Investor presentation November 2024 Third Quarter 2024 Investor Presentation
Slide 2: Disclaimer
Disclaimer This presentation is not an offer or solicitation of an offer to buy or sell securities. It is solely for use as an investor presentation and is provided as information only. This presentation does not contain all of the information that is material to an investor. By reading the presenta
Slide 3: Table of contents
Table of contents 1. ADCB overview – Investment thesis 04 2. UAE – Economic landscape and competitiveness 11 3. Financial highlights 17 4. Digital & ESG highlights 34 5. Summary and guidance 38 6. Appendix 40 Third Quarter 2024 Investor Presentation
Slide 4: 1. ADCB overview – Investment thesis
1. ADCB overview – Investment thesis Third Quarter 2024 Investor Presentation
Slide 5: Leading UAE bank with a growing market share
ADCB OVERVIEW – INVESTMENT THESIS Leading UAE bank with a growing market share • ADCB is the third largest bank in the UAE by assets, with total assets of AED 639 bn Shareholding structure • The Bank provides over 2.3 million customers with a full suite of products and services, spanning Retail Bank
Slide 6: Driving significant growth and creating long-term value for shareholders
ADCB OVERVIEW – INVESTMENT THESIS Driving significant growth and creating long-term value for shareholders Growing franchise strength Long-term shareholder value creation Net profit (AED bn) Dividend per share (AED) CAGR: +12% CAGR: +25% 0.55 0.18 cash 0.56 8.2 0.38 0.37 stock 5.2 5.2 6.4 0.27 0.37
Slide 7: Passion for service excellence reflected in growing customer numbers
ADCB OVERVIEW – INVESTMENT THESIS Passion for service excellence reflected in growing customer numbers Strong focus on customer service and experience Key highlights • A customer-first ethos has been embedded across the entire • The Bank’s success is measured through fast feedback loops organisation
Slide 8: Partnered with key regional and global ecosystem players
ADCB OVERVIEW – INVESTMENT THESIS ADCB has partnered with key regional and global ecosystem players to deliver exceptional experiences and benefits to our clients Ecosystem partners Type of ecosystem Ecosystem partners • End-to-end digital customer onboarding journey for credit cards via Talabat app
Slide 9: Strong financial performance driving ratings strength
ADCB OVERVIEW – INVESTMENT THESIS Strong financial performance and ongoing proactive engagement is driving ratings strength Credit ratings ESG ratings A/A-1/Positive A+/F1/Stable AA 13.0 Low Risk 15 March 2024 23 September 2024 20 September 2024 23 May 2024 “ Ongoing de-risking of the balance sheet
Slide 10: Strong performance across ESG material topics, industry leading ESG ratings
ADCB OVERVIEW – INVESTMENT THESIS Strong performance across a wide range of ESG material topics, coupled with high levels of transparency, has resulted in ADCB receiving industry leading ESG ratings Strategic Framework Support the transition to an inclusive, net zero economy Our sustainability strat
Slide 11: 2. UAE – Economic landscape and competitiveness
2. UAE – Economic landscape and competitiveness Third Quarter 2024 Investor Presentation
Slide 12: ADCB well positioned to expand in the UAE and leverage opportunities for growth
UAE – ECONOMIC LANDSCAPE AND COMPETITIVENESS ADCB well positioned to expand in the UAE and leverage opportunities for growth Strong economic growth Proactive government frameworks and strategic initiatives Attracting global talent 74% UAE’s roadmap for a future based economy Emirates Lunar Emirati M
Slide 13: UAE strategically positioning itself as a global leader in several sectors of the future
UAE – ECONOMIC LANDSCAPE AND COMPETITIVENESS UAE is strategically positioning itself as a global leader in several sectors of the future Substantial investment in emerging sectors Investment into AI 2024 Future Possibilities Index (FPI)(6) Agritech(1) Making the UAE a global leader in AI by 2031 UAE
Slide 14: Strong momentum in key non-oil sectors supporting real GDP growth
UAE – ECONOMIC LANDSCAPE AND COMPETITIVENESS Strong momentum in key non-oil sectors supporting real GDP growth UAE: Hotel occupancy levels generally higher than pre-pandemic Abu Dhabi: Airport passenger number have seen a strong rise Dubai seeing strong growth in overnight visitor numbers, despite l
Slide 15: Robust investment outlook with higher project awards
UAE – ECONOMIC LANDSCAPE AND COMPETITIVENESS Robust investment outlook with higher project awards UAE: The value of project awards in 9M 2024 has already UAE: Both Abu Dhabi and Dubai seeing strong project awards; UAE: Broad-based project award outlook for the remainder of surpassed total awards in
Slide 16: Resilient UAE economy despite heightened global uncertainty
UAE – ECONOMIC LANDSCAPE AND COMPETITIVENESS Resilient UAE economy despite heightened global uncertainty Global: Central banks have begun the interest rate US: Market probability of a recession has diminished, Global: Oil prices under pressure as higher non-OPEC cutting cycle including Fed, ECB and
Slide 17: 3. Financial highlights
3. Financial highlights Third Quarter 2024 Investor Presentation
Slide 18: Record results driven by accelerated growth across businesses
FINANCIAL HIGHLIGHTS Record results driven by accelerated growth across businesses, with improved efficiencies and credit quality Financial highlights Strategic highlights 9M’24 key highlights • Record 9M’24 profit before tax of AED 7.702 bn, • Ranked as an ‘Industry leader’ following MSCI ESG ratin
Slide 19: Revised FY'24 and medium-term guidance underpinned by strong loan growth
FINANCIAL HIGHLIGHTS Revised FY’24 and medium-term guidance underpinned by strong loan growth and improved risk profile Highlights(1) • FY’24 guidance for net loan growth has been revised to 16%–17% from the previous c.15%, while medium term-guidance has FY’24 guidance 9M’24 actual Medium term guida
Slide 20: ROATE of 14.8% in 9M'24, at the upper end of FY'24 guidance
FINANCIAL HIGHLIGHTS ROATE of 14.8% in 9M’24, at the upper end of FY’24 guidance supported by broad-based income growth Income statement (AED mn) 9M’24 9M’23 ∆YoY Strong 9M’24 financial performance (AED bn) Total net interest income(1) 9,721 8,961 8% Profit before tax Operating income Non-interest i
Slide 21: 13 quarters of consecutive growth in profit before tax
FINANCIAL HIGHLIGHTS 13 quarters of consecutive growth in profit before tax(1), +34% YoY in Q3’24, driven by strong non-interest income and improved COR Income statement (AED mn) Q3’24 Q2’24 Q3’23 ∆QoQ ∆YoY Q3’24 profit before tax (AED bn) Total net interest income(2) 3,144 3,276 3,179 (4%) (1%) 2.6
Slide 22: Steady risk-adjusted NIM as net interest income up 8% YoY
FINANCIAL HIGHLIGHTS Steady risk-adjusted NIM in 9M’24 as portfolio rebalanced towards GREs, while net interest income was up 8% YoY Net interest income (AED mn) Asset yield (%)(1)(2) Key highlights 9M’23 9M’24 • The Bank continued to target high-quality, low-risk credit counterparties to enhance re
Slide 23: Strong broad-based growth in 9M'24 non-interest income
FINANCIAL HIGHLIGHTS Strong broad-based growth in 9M’24 non-interest income, with net fees & commission income +27% YoY Non-interest income (AED mn) Q3’24 Q2’24 Q3’23 ΔQoQ ΔYoY 9M’24 9M’23 ΔYoY Key highlights Net fees and commission income 867 809 611 7% 42% 2,378 1,867 27% • Diversified revenue str
Slide 24: Disciplined cost management amid revenue growth
FINANCIAL HIGHLIGHTS Disciplined cost management amid revenue growth, driving 60 bps YoY improvement in 9M’24 cost to income ratio Operating expenses (AED mn) Cost to income ratio Key highlights • Driven by disciplined cost management, Q3’24 cost to income ratio improved by 110 bps YoY and 40 bps +7
Slide 25: Strong balance sheet with total assets growing at 14% CAGR
FINANCIAL HIGHLIGHTS Strong balance sheet with total assets growing at 14% CAGR over the past three years Balance sheet (AED mn) Sep’24 Jun’24 Dec’23 Sep’23 ΔQoQ ΔYTD ΔYoY CET1 ratio(2) CAR(2) 13.11% 16.68% Total assets 638,754 612,242 567,194 536,889 4% 13% 19% 16.68% 13.17% 16.43% 13.11% 16.22% 12
Slide 26: Well-balanced loan portfolio with net loans up 14% YTD
FINANCIAL HIGHLIGHTS Well-balanced loan portfolio with net loans up 14% YTD, and GREs accounting for 37% of gross loan growth Asset mix (AED bn) Net loans(2) (AED bn) Key highlights 639 567 10% 344.0 • In line with strategic rebalancing of the portfolio, GREs 10% 7% 332.2 accounted for 37% of YTD gr
Slide 27: Well diversified and highly secured real estate portfolio
FINANCIAL HIGHLIGHTS Well diversified and highly secured real estate portfolio with strict internal caps and underwriting policies Commercial real estate investment (% of total gross loans) Total real estate portfolio Portfolio composition Real estate loan classification • Purpose of the loan is rea
Slide 28: Highly-rated portfolio of investment securities up 10% YTD
FINANCIAL HIGHLIGHTS Highly-rated portfolio of investment securities increased 10% YTD to AED 141 bn, with bonds representing 99% of the portfolio Investment securities (AED mn) Investment securities: AED 141,434 mn(2) Key highlights Domestic 34% Government 66% • Investment securities increased 10%
Slide 29: Customer deposits grew AED 77 bn YoY, with CASA up AED 12 bn
FINANCIAL HIGHLIGHTS Customer deposits grew AED 77 bn YoY, with CASA up AED 12 bn and comprising 42% of total deposits Liability mix Customer deposits (AED bn) CASA split by business (AED bn) Customer deposits 72% 390.0 406.7 Total Contribution to Borrowings 16% 362.9 237.3 As at 30 Sep 2024 deposit
Slide 30: Strong capital ratios supported by retained earnings
FINANCIAL HIGHLIGHTS Strong capital ratios, supported by retained earnings and enhanced risk-weighted asset profile through increased exposure to GREs Capital adequacy ratio walkthrough (%)(1) 1.59 0.40 16.22 16.68 (0.13) 1.13 (1.00) (0.13) (0.27) 1.54 2.23 2.03 12.86 13.11 31-Dec-23 9M’24 net profi
Slide 31: Significant improvement in cost of risk
FINANCIAL HIGHLIGHTS Significant improvement in cost of risk, reflecting reduced impairment charges Cost of risk Non-performing loans(1) (AED mn) POCI assets (AED mn) and NPL ratio and NPL ratio including POCI FY’23 3.73% 3.59% 3.45% 4.20% 3.87% 3.69% Impairment charge: AED 3,477 mn Cost of risk: 0.
Slide 32: Disciplined risk management driving strong retail portfolio performance
FINANCIAL HIGHLIGHTS Disciplined risk management and underwriting practices driving strong risk performance of the ADCB retail portfolio compared to the market Total portfolio delinquency 30+ DPD Personal loans delinquency 30+ DPD Credit cards delinquency 30+ DPD 1.6% 1.5% 1.4% 1.4% 1.4% 1.4% 1.1% 1
Slide 33: Update on key subsidiaries: Al Hilal Bank and ADCB Egypt
FINANCIAL HIGHLIGHTS Update on key subsidiaries: Accelerated implementation of a digital-first strategy for Al Hilal Bank, while ADCB Egypt reports strong net profit growth Egypt • Al Hilal Bank’s cloud-based app has acquired • ADCB Egypt delivered a strong financial c. 46,000 in Q3’24, representing
Slide 34: 4. Digital & ESG highlights
4. Digital & ESG highlights Third Quarter 2024 Investor Presentation
Slide 35: Digital engagement accelerated, mobile & internet subscriptions crossing 2 mn
DIGITAL HIGHLIGHTS Digital engagement accelerated, with mobile & internet subscriptions crossing 2 mn mark, representing over 90% of customer base(1) Digital impact on businesses Digital transformation and AI initiatives Q3’24 digital highlights(1) • ADCB Group’s UAE operations, including Al Hilal B
Slide 36: ADCB ranked 'industry leader' following MSCI ESG rating upgrade to 'AA'
ESG HIGHLIGHTS ADCB ranked as ‘industry leader’ following MSCI ESG rating upgrade to ‘AA’ • ADCB ranked in the top 37% of banks in the MSCI All Country Sustainable finance - lending (60+ corporate deals Eligible Green Loan Portfolio(1) World Index (ACWI) following an upgrade to ‘AA’ from ‘A’ in exec
Slide 37: Progress against Board-approved sustainable finance framework and target
ESG HIGHLIGHTS ADCB progress against Board-approved sustainable finance framework and target Q3 2024 update Progress vs. sustainable finance target (AED bn) Commit to lend, invest, and facilitate AED 125 bn (USD 34 bn) by 2030 Reported previously, To date, 2030 Target 125 2021-Q2’24 2021-Q3’24 By ca
Slide 38: 5. Summary and guidance
5. Summary and guidance Third Quarter 2024 Investor Presentation
Slide 39: Summary and recap of revised guidance
SUMMARY AND GUIDANCE Summary and recap of revised guidance Summary • Strong set of results marked by robust loan growth, higher non-interest income across core FY’24 guidance 9M’24 actual Medium term guidance (2024–2026) businesses, as well as improved cost of risk Loan growth 16%–17% 14% Loan growt
Slide 40: 6. Appendix
6. Appendix Third Quarter 2024 Investor Presentation
Slide 41: The UAE's Future Roadmap
APPENDIX The UAE's Future Roadmap Emirates Lunar Emirati Mohammed bin Abu Dhabi Environment Vision Plan Abu Dhabi Abu Dhabi Surface Transport Dubai Autonomous Mission interplanetary Rashid Al Maktoum Economic Vision 2030 2030 Transportation Mobility Master Plan Transportation mission Solar Park 2030
Slide 42: UAE key economic indicators
APPENDIX UAE key economic indicators United Arab Emirates Population 9.79 million (2024, IMF) GDP per capita US$ 55.34 thousand (2024, based on IMF population data) Forecast 2024 real GDP growth Headline – 3.8% Non-oil – 4.6% (ADCB estimate) Arabian Gulf Current account balance / GDP 8.4% (2024 esti
Slide 43: UAE publishes first Long-Term Strategy to aid transition to net zero
APPENDIX UAE Ministry of Climate Change and Environment has published its first Long-Term Strategy to aid the transition to net zero UAE Long-Term Strategy (LTS) UAE Government’s climate commitments(1) • On 4th January 2024, the UAE submitted its first LTS to the United Nations Absolute GHG emission
Slide 44: UAE Net Zero strategies, policies and programmes by economic sector
APPENDIX UAE Net Zero strategies, policies and programmes by economic sector 30+ national, emirate and company-level programmes considered in UAE Net Zero Baseline Power and water Industry Transport Buildings Waste Agriculture ‘We the UAE 2031’ Vision UAE National Climate Change Plan 2050; UAE Envir
Slide 45: Taking action to support the journey to a net zero economy
APPENDIX Taking action to support the journey to a net zero economy Third Quarter 2024 Investor Presentation 45
Slide 46: Governance structure
APPENDIX Governance structure Board of Directors • The Group Chief Risk Officer reports directly to the Board Risk Committee and has a dotted line to the Group Chief Board Executive Board Risk Board Nomination, Executive Officer Compensation, HR & Board Audit Committee Committee Committee Governance
Slide 47: Our 10-year journey
APPENDIX Our 10-year journey Dividend per share (AED) Basic earnings per share (AED) Total shareholder return (%) 0.40 0.45 0.40 0.42 0.46 0.38 0.27 0.37 0.55 0.56 0.74 0.93 0.77 0.80 0.90 0.70 0.51 0.73 0.86 1.07 9% 40% 107% 1-year TSR 5-year TSR 10-year TSR (2) 2014 2015 2016 2017 2018 2019 2020 2
Slide 48: Our 10-year journey (continued)
APPENDIX Our 10-year journey (continued) Net profit (AED bn) Operating income (AED bn) Cost to income ratio (%) 8.206 16.87 6.434 14.34 39.6 13.21 12.47 12.26 5.244 5.247 36.3 4.927 4.840 4.201 4.157 4.278 9.18 34.2 34.7 34.1 8.90 34.0 33.6 3.809 8.26 8.50 32.9 33.1 7.53 32.3 2014 2015 2016 2017 201
Slide 49: Our 10-year journey (continued)
APPENDIX Our 10-year journey (continued) Total assets and net loans and advances (AED bn) Customer deposits and CASA (AED bn) 567 363 498 309 440 265 405 411 262 251 265 196 239 156 280 157 172 196 177 112 258 265 155 163 123 228 144 160 204 126 100 102 114 82 90 92 107 72 302 70 81 248 239 244 258
Slide 50: Balance sheet as at 30 September 2024
APPENDIX Balance sheet as at 30 September 2024 AED mn Sep’24 Dec’23 ΔYTD Cash and balances with Central banks, net 46,530 45,375 3% Deposits and balances due from banks, net 41,781 37,625 11% Financial assets at fair value through profit or loss 13,018 10,063 29% Derivative financial instruments 14,
Slide 51: Income statement for the nine-month period ended 30 September 2024
APPENDIX Income statement for the nine-month period ended 30 September 2024 Quarterly trend YTD trend AED mn Q3’24 Q3’23 ΔYoY 9M’24 9M’23 ΔYoY Interest and income from Islamic financing 8,476 7,386 15% 25,011 20,197 24% Interest expense and profit distribution (5,332) (4,206) 27% (15,290) (11,236) 3
Slide 52: ADCB Investor Relations
ADCB Investor Relations Contact information Click to view our reports For more information, please visit adcb.com/ir 2023 Annual Report or contact ADCB Investor Relations at ir@adcb.com adcb.com/annualreport 2023 Corporate 2023 ESG Report Governance Report adcb.com/esgreport adcb.com/cgreport Third
Abu Dhabi Commercial Bank PJSC — Q3 2024 Earnings Presentation on 6ix