Abu Dhabi Commercial Bank · ADX:ADCB
Abu Dhabi Commercial Bank — Abu Dhabi Commercial Bank PJSC — Q1 2024 Earnings Presentation
53 slides from Abu Dhabi Commercial Bank's earnings presentation, May 2024
Slide 1: First quarter 2024 Investor presentation
ABU DHABI COMMERCIAL BANK PJSC adcb.com/ir First quarter 2024 Investor presentation May 2024 First 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. Financial highlights 11 3. Digital highlights 25 4. ESG highlights 27 5. Operating environment & updated guidance 35 6. Appendix 39 First Quarter 2024 Investor Presentation
Slide 4: 1. ADCB overview – investment thesis
1. ADCB overview – investment thesis First 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 594 bn Shareholding structure • The Bank provides over 2 million customers with a full suite of products and services, spanning Retail Bankin
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 Customer service and experience is in the Bank’s DNA Key highlights • A customer-first ethos has been embedded across the entire • Customer service included in every employees KPI’s organisation an
Slide 8: Delivering a digital future with customer centric approach to innovation and partnerships
ADCB OVERVIEW – INVESTMENT THESIS Delivering a digital future with customer centric approach to innovation and partnerships Digital ecosystem Holistic approach beyond product offerings ADCB’s WhatsApp channel Real-time digital payments(2) Digital security AI-driven conversational interface in WhatsA
Slide 9: Strong financial performance and ongoing proactive engagement is 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 A 12.5 Low Risk 15 March 2024 20 March 2024 16 January 2024 13 January 2024 “ Ongoing de-risking of the balance sheet has
Slide 10: Strong performance across a wide range of ESG material topics
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 Climate Customers and Employees Governance communities Joined UN NZBA 280,000+ 43% 18% Became 3rd ban
Slide 11: Financial highlights
1. Financial highlights First Quarter 2024 Investor Presentation
Slide 12: Strong momentum into 2024 amid robust UAE economy
FINANCIAL HIGHLIGHTS Strong momentum into 2024 amid robust UAE economy Highlights Q1’24 key highlights • Net profit before tax increased 26% YoY to AED 2.431 bn • Strong franchise continues to attract customer deposits, Diversified growth by business streams reflecting strong growth across core busi
Slide 13: Strong YoY earnings growth driven by diversified revenue streams, with operating income up 17%
FINANCIAL HIGHLIGHTS Strong YoY earnings growth driven by diversified revenue streams, with operating income up 17% Income statement (AED mn) Q1’24 Q4’23 Q1’23 ∆QoQ ∆YoY Strong financial performance (AED bn) Total net interest income(1) 3,301 3,413 2,851 (3%) 16% Net profit before tax Operating inco
Slide 14: Increased risk-adjusted NIM on higher exposure to GREs supported by improved cost of risk
FINANCIAL HIGHLIGHTS Increased risk-adjusted NIM on higher exposure to GREs supported by improved cost of risk Net interest income (AED mn) Asset yield (%)(1) Key highlights FY’23 • While the Bank has achieved strong loan growth over the last 12 months in a high rate environment, NIM declined by 6 b
Slide 15: Q1'24 non-interest income up 21% YoY on strong fee income and trading gains
FINANCIAL HIGHLIGHTS Q1’24 non-interest income up 21% YoY on strong fee income and trading gains Non-interest income (AED mn) Q1’24 Q4’23 Q1’23 ΔQoQ ΔYoY Key highlights 577 • Net fees and commission income increased 32% YoY, Net fees and commission income 703 533 22% 32% driven by strong growth in g
Slide 16: Improved cost to income ratio driven by disciplined cost management
FINANCIAL HIGHLIGHTS Improved cost to income ratio driven by disciplined cost management Operating expenses (AED mn) Cost to income ratio Key highlights • Continued broad based investment in the growth of -60 bps the business including digital technology, people and sales +15% incentives as well as
Slide 17: Robust balance sheet with strengthened CET1 and capital adequacy ratios
FINANCIAL HIGHLIGHTS Robust balance sheet with strengthened CET1 and capital adequacy ratios Balance sheet (AED mn) Mar’24 Dec’23 Mar’23 ΔQoQ ΔYoY CET1 ratio CAR 12.96% 16.26% Total assets 594,405 567,194 501,423 5% 19% 16.22% 16.26% Net interest earning assets 502,260 484,972 425,439 4% 18% 12.93%
Slide 18: AED 41 bn of new credit extended in Q1'24, with loans to GREs increasing
FINANCIAL HIGHLIGHTS AED 41 bn of new credit extended in Q1’24, with loans to GREs increasing 14% during the quarter Asset mix (AED bn) Net loans(2) (AED bn) Key highlights 594 567 • Robust credit pipeline with increased lending in Q1’24 to 10% 318.2 10% 302.0 corporate clients in key economic secto
Slide 19: Investment securities increased 12% YoY to AED 132 bn
FINANCIAL HIGHLIGHTS Investment securities increased 12% YoY to AED 132 bn, with bonds representing 99% of portfolio Investment securities (AED mn) Investment securities: AED 132,384 mn(2) Key highlights Domestic 34% Government 66% • Investment securities increased 12% YoY +12% Other GCC countries 2
Slide 20: Substantial increase in customer deposits of AED 73 bn YoY
FINANCIAL HIGHLIGHTS Substantial increase in customer deposits of AED 73 bn YoY, with the Bank attracting AED12 bn of CASA deposits in Q1’24 Liability mix Customer deposits (AED bn) CASA split by business (AED mn) Customer deposits 73% 383.7 Total Contribution to 362.9 Borrowings 15% As at 31 Mar 20
Slide 21: The Bank remains well capitalised with capital ratios well above regulatory requirements
FINANCIAL HIGHLIGHTS The Bank remains well capitalised with capital ratios well above regulatory requirements Capital adequacy ratio walkthrough (%)(1) 0.53 0.04 16.22 16.26 (0.07) (0.06) (0.21) 1.13 (0.19) 1.13 2.23 2.18 12.86 12.96 12.96 31-Dec-23 Q1’24 net profit ∆ Impact of changes ∆ Tier-1 ∆ Cr
Slide 22: Cost of risk remains well within guidance of <80bps, NPL ratio of 3.44%
FINANCIAL HIGHLIGHTS Cost of risk remains well within guidance of <80bps, while NPL ratio of 3.44% is at the lowest level since 2020 Cost of risk Non-performing loans(1) (AED mn) POCI assets (AED mn) and NPL ratio and NPL ratio including POCI • Q1’24 cost of risk was 67 bps, remaining • The NPL rati
Slide 23: Al Hilal Bank's super app attracted 49,000 new banking customers in Q1'24
FINANCIAL HIGHLIGHTS Al Hilal Bank’s super app attracted 49,000 new banking customers in Q1’24 supported by enhanced marketplace ecosystem • Cloud-based super app has acquired 769,000 • Al Hilal Bank has seamlessly integrated new registered users since launch in early 2022, credit card offerings int
Slide 24: ADCB Egypt sustains growth momentum and fosters external partnerships to drive ESG agenda
FINANCIAL HIGHLIGHTS ADCB Egypt sustains growth momentum and fosters external partnerships to drive ESG agenda Egypt • Strong financial performance of ADCB Egypt • Continued focus on digital transformation. despite a backdrop of macroeconomic In Q1’24, subscribers to digital platforms challenges wer
Slide 25: 3. Digital highlights
3. Digital highlights First Quarter 2024 Investor Presentation
Slide 26: Investment in digital and partnerships driving highest quarterly digital subscriptions
DIGITAL HIGHLIGHTS Investment in digital and partnerships driving highest quarterly digital subscriptions Retail Banking Group (RBG) Corporate & Investment Banking Group (CIBG) Q1’24 digital highlights(1) • ADCB Group’s UAE operations, including Al Hilal Bank welcomed • Launch of Fintrade, a digital
Slide 27: 4. ESG highlights
4. ESG highlights First Quarter 2024 Investor Presentation
Slide 28: UAE Ministry of Climate Change and Environment has published its first Long-Term Strategy
ESG HIGHLIGHTS 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 em
Slide 29: UAE Net Zero strategies, policies and programmes by economic sector
ESG HIGHLIGHTS 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
Slide 30: Continued momentum on ESG with roadmap to deliver commitments under the Net Zero Banking Alliance
ESG HIGHLIGHTS Continued momentum on ESG with roadmap to deliver commitments under the Net Zero Banking Alliance (NZBA) Key highlights • Following ADCB’s strategic decision to join the Net Zero • Over 11,000 hours of ESG training delivered since the launch Highest regional ESG rankings(1) Banking Al
Slide 31: NZBA roadmap: Aligning portfolios and reducing financed emissions
ESG HIGHLIGHTS NZBA roadmap: Aligning portfolios and reducing financed emissions Portfolio alignment NZBA key milestone dates for ADCB ADCB NZBA roadmap to meet May 2025 milestone In preparation for joining NZBA, ADCB carried Phase 1 • Deep dive analysis • Review and recommend out a comprehensive re
Slide 32: Sustainable finance – new green/sustainable products and services launched
ESG HIGHLIGHTS Sustainable finance – new green/sustainable products and services launched In 2023, the Bank launched new products and services to support both our corporate and retail customers in their transition to net zero For corporate customers For retail customers Sustainable call account Carb
Slide 33: Progress against Board-approved sustainable finance framework and target
ESG HIGHLIGHTS Progress against Board-approved sustainable finance framework and target Progress vs. sustainable finance target (AED bn) Commit to lend, invest, and facilitate AED 125 bn (USD 34 bn) by 2030 To date, To date, Target, 2021-2023 2021-Q1’24 2021-2030 Progress 2030 Target 125 By category
Slide 34: Taking action to support the journey to a net zero economy
ESG HIGHLIGHTS Taking action to support the journey to a net zero economy First Quarter 2024 Investor Presentation 34
Slide 35: 5. Operating environment & guidance
5. Operating environment & guidance First Quarter 2024 Investor Presentation
Slide 36: Resilient UAE economy despite heightened global uncertainty
OPERATING ENVIRONMENT & GUIDANCE Resilient UAE economy despite heightened global uncertainty Global: Central banks are likely done with interest rate US: Probability of a recession has diminished following Global: OPEC+ output cuts have helped tighten oil hiking cycle; rate cuts to begin H2’24 conti
Slide 37: UAE key economic indicators
OPERATING ENVIRONMENT & GUIDANCE UAE key economic indicators United Arab Emirates Population 10.24 million (2024, IMF) GDP per capita US$ 52,410 (2024, based on IMF population data) Forecast 2024 real GDP growth Headline – 3.4% Non-oil – 4.4% (ADCB estimate) Arabian Gulf Current account balance / GD
Slide 38: Summary and guidance
OPERATING ENVIRONMENT & GUIDANCE Summary and guidance Summary FY’24 guidance Q1’24 actual Medium term guidance (2024–2026) • Strong momentum into 2024 marked by Loan growth 8%–10% 5% Loan growth High-single digit robust loan and deposit growth in core RBG and CIBG businesses • Diversified revenue st
Slide 39: 6. Appendix
6. Appendix First Quarter 2024 Investor Presentation
Slide 40: 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 41: Board bios
APPENDIX Board bios Chairman of ADCB Board NCHRG Chairman BAC Chairlady BEC Chairman H.E. Khaldoon Khalifa Al Mubarak H.E. Hussain Jasim Naser AlNowais Aysha Al Hallami Saeed Mohamed Hamad Almazrouei Chairman Vice Chairman Independent, Non-Executive Director Independent, Non-Executive Director Indep
Slide 42: Board bios (continued)
APPENDIX Board bios (continued) BRC Chairman Carlos Obeid Khalid Deemas Alsuwaidi Sheikh Zayed Bin Suroor Al Nahyan Khaled H. Alkhoori Independent, Non-Executive Director Non-Executive Director(1) Independent, Non-Executive Director Independent, Non-Executive Director Carlos Obeid was appointed to t
Slide 43: Board bios (continued)
APPENDIX Board bios (continued) Fatima Al Nuaimi Sheikh Sultan Bin Suroor Al Dhaheri H.E. Amr Al Menhali Independent, Non-Executive Director Independent, Non-Executive Director Independent, Non-Executive Director Fatima Al Nuaimi was appointed to the Board of Directors in 2022. She Sheikh Sultan Bin
Slide 44: Executive Management bios
APPENDIX Executive Management bios Ala’a Eraiqat Deepak Khullar Paul Keating Ludovic Nobili Group Chief Executive Officer Group Chief Financial Officer Group Chief Risk Officer Group Head of Corporate & Investment Banking Group Ala’a Eraiqat joined ADCB in January 2004 and served in various senior D
Slide 45: Executive Management bios (continued)
APPENDIX Executive Management bios (continued) Deepak Rochlani Robbert Muller Mohammed Al Jayyash Group Head of Retail Banking Group Treasurer Group Chief Operations Officer Deepak Rochlani joined ADCB in 2004 and is the Group Head of Retail Robbert Muller joined ADCB in January 2023 as Group Treasu
Slide 46: Executive Management bios (continued)
APPENDIX Executive Management bios (continued) Rasha Mortada Abdulaziz Almoosa Moizes Palma Group Chief Compliance Officer Group Head Of Human Resources Acting Group Chief Credit Officer Rasha Mortada was appointed as Group Chief Compliance Officer in 2021, Abdulaziz Almoosa joined ADCB in 2012 and
Slide 47: Executive Management bios (continued)
APPENDIX Executive Management bios (continued) Jane Livingston Abdirizak Mohamed Abdulla Abdul Aziz AlShamsi Group General Counsel Group Chief Internal Auditor Group Chief Business Officer Jane Livingston joined ADCB in 2011 and was appointed as Group Abdirizak Mohamed has been the Group Chief Inter
Slide 48: 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 49: 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 50: 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 51: Balance sheet as at 31 March 2024
APPENDIX Balance sheet as at 31 March 2024 AED mn Mar’24 Dec’23 ΔYoY Cash and balances with Central banks, net 36,365 45,375 (20%) Deposits and balances due from banks, net 45,508 37,625 21% Financial assets at fair value through profit or loss 10,480 10,063 4% Derivative financial instruments 15,98
Slide 52: Income statement for the three-month period ended 31 March 2024
APPENDIX Income statement for the three-month period ended 31 March 2024 AED mn Q1’24 Q1’23 ΔYoY Interest and income from Islamic financing 8,210 6,097 35% Interest expense and profit distribution (4,908) (3,245) 51% Net interest and Islamic financing income 3,301 2,851 16% Net fees and commission i
Slide 53: 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 First
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