Double-digit profit growth expected in 2022

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Abu Dhabi Islamic Bank, the biggest Sharia-compliant lender in the emirate, is bullish about double-digit profit growth in 2022 on the back of interest rate hikes, after it posted an 18 per cent surge in first-quarter net profit.

Interest rate hikes are expected to significantly boost the bottom line this year, Mohamed Abdelbary, ADIB’s group chief financial officer, told The National.

“We have a lot of tailwind going into 2022,” he said.Net profit for the three-month period to the end of March rose to Dh715 million ($194.8m) from a year earlier, ADIB said in statement on Wednesday to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue in the first quarter climbed 6 per cent to Dh1.41 billion from a year earlier, driven by a 12 per cent annual increase in non-funded income to Dh620m and a 1 per cent growth in funded income to Dh789m.

Provisions for bad loans declined 15 per cent to Dh113m, reflecting an overall improvement in economic conditions. The lender also improved the provision coverage of non-performing financing, including collaterals, by 9.2 percentage points to more than 121 per cent.

“We are very happy with the outcome of our performance … I think the most encouraging part is that we managed to [increase profit] by growing our revenues by 6 per cent and reducing costs by 2 per cent. And the benefits from impairments is only 15 per cent,” Mr Abdelbary said. “Accordingly, it’s really a good story to have in terms of underlying growth.”

The UAE economy bounced back strongly from the Covid-driven slowdown last year and has continued momentum into this year despite global geopolitical headwinds and pandemic-related uncertainties. The Arab world’s second-largest economy introduced fiscal and monetary stimuluses worth Dh388bn that supported the economic rebound.

The economic stimulus includes the Dh50bn Targeted Economic Support Scheme (Tess) launched by the Central Bank of the UAE to boost liquidity in the banking and financial sector, parts of which have been extended to mid-2022.— The National