Abu Dhabi Commercial Bank · ADX:ADCB
Abu Dhabi Commercial Bank — Abu Dhabi Commercial Bank PJSC — Q2 2024 Earnings Presentation
53 slides from Abu Dhabi Commercial Bank's earnings presentation, September 2024
Slide 1: Second quarter 2024 Investor presentation
ABU DHABI COMMERCIAL BANK PJSC adcb.com/ir Second quarter 2024 Investor presentation September 2024 Second 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 highlights 33 5. ESG highlights 35 6. Summary and guidance 42 7. Appendix 44 Second Quarter 2024 Investor Presentation
Slide 4: 1. ADCB overview – Investment thesis
1. ADCB overview – Investment thesis Second 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 612 bn Shareholding structure • The Bank provides over 2.2 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: 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 13.0 Low Risk 15 March 2024 20 March 2024 16 January 2024 23 May 2024 “ Ongoing de-risking of the balance sheet has hel
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+ 44% 18% Became 3rd ban
Slide 11: 2. UAE – Economic landscape and competitiveness
2. UAE – Economic landscape and competitiveness Second 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 Amongst the top 5 cities
Slide 13: UAE is 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 H1 2024 has already UAE: Both Abu Dhabi and Dubai seeing strong project awards; UAE: Broad-based project award outlook for the remainder of the surpassed total awards
Slide 16: Resilient UAE economy despite heightened global uncertainty
UAE – ECONOMIC LANDSCAPE AND COMPETITIVENESS Resilient UAE economy despite heightened global uncertainty Global: Central banks are likely done with interest rate hiking US: Probability of a recession has diminished following Global: OPEC+ output cuts have helped tighten oil market cycle; rate cuts b
Slide 17: 3. Financial highlights
3. Financial highlights Second Quarter 2024 Investor Presentation
Slide 18: Strong earnings growth driven by increased lending focused on GREs and higher fee income
FINANCIAL HIGHLIGHTS Strong earnings growth driven by increased lending focused on GREs and higher fee income amid robust UAE economic fundamentals Highlights H1’24 key highlights • Strategy for accelerated growth driving strong momentum, with • Strong franchise fueled 23% YoY (AED 74 bn) and 7% YTD
Slide 19: H1'24 net profit before tax +28% YoY, supported by double-digit growth in net interest income and non-interest income
FINANCIAL HIGHLIGHTS H1’24 net profit before tax +28% YoY, supported by double-digit growth in net interest income and non-interest income Income statement (AED mn) H1’24 H1’23 ∆YoY Strong H1’24 financial performance (AED bn) Total net interest income(1) 6,577 5,782 14% Net profit before tax Operati
Slide 20: Q2'24 net profit before tax +30% YoY delivering RoATE of 16.5%
FINANCIAL HIGHLIGHTS Q2’24 net profit before tax +30% YoY delivering RoATE of 16.5%; driven by higher operating income and significantly lower impairment charge Income statement (AED mn) Q2’24 Q1’24 Q2’23 ∆QoQ ∆YoY Strong Q2’24 financial performance (AED bn) Total net interest income(1) 3,276 3,301
Slide 21: Higher risk-adjusted NIM on increased lending to high-quality, low-risk credit counterparties
FINANCIAL HIGHLIGHTS Higher risk-adjusted NIM on increased lending to high-quality, low-risk credit counterparties; GREs driving 51% of YTD loan growth Net interest income (AED mn) Asset yield (%)(1) Key highlights H1’23 H1’24 • The Bank achieved net loan growth of AED 60 bn over the last 12 months
Slide 22: Strong broad-based growth in H1'24 non-interest income
FINANCIAL HIGHLIGHTS Strong broad-based growth in H1’24 non-interest income, with fee and trading income +20% YoY respectively Non-interest income (AED mn) Q2’24 Q1’24 Q2’23 ΔQoQ ΔYoY H1’24 H1’23 ΔYoY Key highlights Net fees and commission income 809 703 724 15% 12% 1,512 1,256 20% • Well-balanced r
Slide 23: 30 bps improvement in H1'24 C:I ratio
FINANCIAL HIGHLIGHTS 30 bps improvement in H1’24 C:I ratio, cost investments in revenue generating initiatives yielding good results with 17% income growth Operating expenses (AED mn) Cost to income ratio Key highlights • Over the last 12 months, the Bank has focused on investments to drive growth o
Slide 24: Robust balance sheet, with assets crossing AED 600 bn milestone
FINANCIAL HIGHLIGHTS Robust balance sheet, with assets crossing AED 600 bn milestone, with net loans +AED 30 bn YTD and deposits +AED 27 bn Balance sheet (AED mn) Jun’24 Mar’24 Dec’23 Jun’23 ΔQoQ ΔYTD ΔYoY CET1 ratio CAR 13.17% 16.43% Total assets 612,242 594,405 567,194 521,301 3% 8% 17% 16.43% Net
Slide 25: Robust loan growth of 10% YTD and upward revision in FY'24 guidance
FINANCIAL HIGHLIGHTS Robust loan growth of 10% YTD and strong new credit pipeline driving upward revision in FY’24 guidance to c.15% (from 8-10%) Asset mix (AED bn) Net loans(2) (AED bn) Key highlights 612 567 332.2 • Strong loan growth marked by strategic targeting of 11% 318.2 10% 6% 302.0 exposur
Slide 26: Well diversified and highly secured real estate portfolio
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 39% • Purpose of the loan is real estate • Repaym
Slide 27: Highly-rated portfolio of investment securities increased 3% YTD
FINANCIAL HIGHLIGHTS Highly-rated portfolio of investment securities increased 3% YTD to AED 133 bn, with bonds representing 99% of the portfolio Investment securities (AED mn) Investment securities: AED 132,609 mn(2) Key highlights Domestic 34% Government 65% • Investment securities increased 3% YT
Slide 28: Deposits up AED 27 bn YTD and AED 74 bn YoY
FINANCIAL HIGHLIGHTS Deposits up AED 27 bn YTD and AED 74 bn YoY, with greater representation of time deposits in funding mix amid higher rates Liability mix Customer deposits (AED bn) CASA split by business (AED mn) Customer deposits 72% 383.7 390.0 Total Contribution to 362.9 Borrowings 15% As at
Slide 29: Improved CET1 and CAR supported by strong H1'24 retained earnings
FINANCIAL HIGHLIGHTS Improved CET1 and CAR supported by strong H1’24 retained earnings and enhanced risk-weighted asset profile with CRWA increasing by only AED 6 bn YTD Capital adequacy ratio walkthrough (%)(1) 1.09 16.22 16.43 1.13 (0.17) (0.09) (0.25) 1.12 (0.13) (0.23) 2.23 2.14 12.86 13.17 31-D
Slide 30: H1'24 cost of risk at 58 bps, well within guidance
FINANCIAL HIGHLIGHTS H1’24 cost of risk at 58 bps, well within guidance of <80 bps as lower impairment charges drive significant improvement 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% 3.44% 3.59% 4.20% 3.81% 3.87% Impairm
Slide 31: Al Hilal Bank's super app attracts 43,000 new banking customers in Q2'24
FINANCIAL HIGHLIGHTS Al Hilal Bank’s super app attracts 43,000 new banking customers in Q2’24; instant subscriptions launched for Shari’ah-compliant IPOs • Al Hilal Bank’s cloud-based super app has • Agreement signed with Abu Dhabi Securities acquired c.852,000 registered users since its Exchange (A
Slide 32: ADCB Egypt reports strong earnings as net loans grow 37% year-on-year
FINANCIAL HIGHLIGHTS ADCB Egypt reports strong earnings as net loans grow 37% year-on-year Egypt • ADCB Egypt delivered a strong financial • Continued focus on digital transformation, with performance despite a backdrop of H1’24 digital banking subscribers +49% YoY macroeconomic challenges • New HQ
Slide 33: 4. Digital highlights
4. Digital highlights Second Quarter 2024 Investor Presentation
Slide 34: Strategic investment in digital driving customer growth and engagement
DIGITAL HIGHLIGHTS Strategic investment in digital driving customer growth and engagement, with 90% of customers registered for digital banking(1) Retail Banking Group (RBG) Corporate & Investment Banking Group (CIBG) Q2’24 digital highlights(1) • ADCB Group’s UAE operations, including Al Hilal Bank
Slide 35: 5. ESG highlights
5. ESG highlights Second Quarter 2024 Investor Presentation
Slide 36: UAE first Long-Term Strategy to aid the transition to net zero
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 37: 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 38: Ongoing progress on Net Zero Banking Alliance commitments and preparation for IFRS S1 & S2
ESG HIGHLIGHTS Ongoing progress on Net Zero Banking Alliance commitments and preparation for introduction of IFRS S1 & S2 • As part of the Net Zero Banking Alliance, ADCB continues to Sustainable finance - lending (60 corporate deals Sustainable finance - select debt capital markets implement its ro
Slide 39: 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 40: ADCB progress against Board-approved sustainable finance framework and target
ESG HIGHLIGHTS ADCB progress against Board-approved sustainable finance framework and target Q2 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, Target, 2030 Target 125 2021-Q1’24 2021-Q2’
Slide 41: Taking action to support the journey to a net zero economy
ESG HIGHLIGHTS Taking action to support the journey to a net zero economy Second Quarter 2024 Investor Presentation 41
Slide 42: 6. Summary and guidance
6. Summary and guidance Second Quarter 2024 Investor Presentation
Slide 43: Summary and guidance
SUMMARY AND GUIDANCE Summary and guidance Summary FY’24 guidance H1’24 actual Medium term guidance (2024–2026) • Strong set of results marked by robust loan in Loan growth (Prev. 8%–10%) c.15% 10% Loan growth High-single digit core RBG and CIBG businesses, with FY’24 loan growth guidance revised upw
Slide 44: 7. Appendix
7. Appendix Second Quarter 2024 Investor Presentation
Slide 45: 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 46: UAE key economic indicators
APPENDIX UAE key economic indicators United Arab Emirates Population 9.79 million (2024, IMF) GDP per capita US$ 53.92 thousand (2024, based on IMF population data) Forecast 2024 real GDP growth Headline – 3.8% Non-oil – 5.3% (ADCB estimate) Arabian Gulf Current account balance / GDP 8.4% (2024 esti
Slide 47: 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 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 30 June 2024
APPENDIX Balance sheet as at 30 June 2024 AED mn Jun’24 Dec’23 ΔYTD Cash and balances with Central banks, net 38,964 45,375 (14%) Deposits and balances due from banks, net 42,658 37,625 13% Financial assets at fair value through profit or loss 11,944 10,063 19% Derivative financial instruments 17,50
Slide 52: Income statement for the six-month period ended 30 June 2024
APPENDIX Income statement for the six-month period ended 30 June 2024 Quarterly trend Half-yearly trend AED mn Q2’24 Q2’23 ΔYoY H1’24 H1’23 ΔYoY Interest and income from Islamic financing 8,326 6,715 24% 16,535 12,811 29% Interest expense and profit distribution (5,049) (3,784) 33% (9,958) (7,030) 4
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 Second
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