Abu Dhabi Islamic Bank Posts 5% Net Profit Increase To AED 316.6 Million For The Second Quarter Of 2011

Management Discussion & Analysis For The Quarter Ending 30 June 2011

Group Financial highlights – Second quarter 2011
• Group net revenue for Q2 2011 was AED 909.6 million vs. AED 744.2 million for Q2 2010, an increase of 22.2%.
• Group operating profit (“margin”) for Q2 2011 was AED 552.4 million vs. AED 436.2 million for Q2 2010, an increase of 26.6%.
• Total credit provisions and impairments for Q2 2011 were AED 235.8 million vs. AED 134.6 million in Q2 2010, an increase of 75.2%.
• Group net profit for Q2 2011 was AED 316.6 million vs. AED 301.6 million in Q2 2010, an increase of 5.0% despite increasing credit provisions and impairments by 75.2%.
• ADIB remains one of the most liquid banks in the UAE, with a customer financing to deposits ratio of 90.5% and net due from banks of AED 9.0 billion.
• Capital adequacy position under Basel II remains strong at 16.1% (16.0% at the end of 2010).

Bank Financial highlights – Second quarter 2011
• Bank net revenue for Q2 2011 was AED 875.6 million vs. AED 747.8 million for Q2 2010, an increase of 17.1%.
• Bank operating profit (“margin”) for Q2 2011 was AED 541.5 million vs. AED 466.2 million for Q2 2010, an increase of 16.2%.
• Total credit provisions and impairments for Q2 2011 were AED 148.9 million vs. AED 134.6 million in Q2 2010, an increase of 10.6%.
• Bank net profit for Q2 2011 was AED 392.6 million vs. AED 331.6 million in Q2 2010, an increase of 18.4%.
• Total number of customers increased by 52,717 since Q2 2010 to reach 439,734.
• Total number of branches stands at 66 vs. 57 in Q2 2010.

Financial highlights – First half 2011
• Group net revenue for H1 2011 was AED 1,717.1 million vs. AED 1,424.8 million for H1 2010, an increase of 20.5%.
• Group operating profit (“margin”) for H1 2011 was AED 1,015.1 million vs. AED 834.7 million for H1 2010, an increase of 21.6%.
• Group net profit for H1 2011 was AED 619.8 million vs. AED 594.9 million in H1 2010, an increase of 4.2% despite an increase in credit provisions and impairments of 64.9%.

Financial analysis
Income Statement: Q2 2011 vs. Q2 2010 and Q1 2011
• Group net revenues for Q2 2011 increased to AED 909.6 million vs. AED 744.2 million in Q2 2010, a 22.2% increase (and an increase of 12.6% over the AED 807.5 million in Q1 2011).
• Bank net revenues for Q2 2011 increased to AED 875.6 million vs. AED 747.8 million in Q2 2010, a 17.1% increase (and an increase of 7.6% over the AED 813.8 million in Q1 2011).
• Group net revenue from funding activities for Q2 2011 increased to AED 722.7 million vs. 647.6 million for Q2 2010, an increase of 11.6% (and an increase of 8.7% over the AED 664.7 million in Q1 2011).
• Group fee and commission income for Q2 2011 increased to AED 105.3 million vs. AED 78.9 million in Q2 2010, an increase of 33.4% (and a decrease of 5.3% over the AED 111.2 million in Q1 2011).
• Group operating profit (“margin”) for Q2 2011 reached AED 552.4 million vs. AED 436.2 million for Q2 2010, an increase of 26.6% (an increase of 19.4% over the AED 462.8 million in Q1 2011).
• Bank operating profit (“margin”) for Q2 2011 reached AED 541.5 million vs. AED 466.2 million for Q2 2010, an increase of 16.2% (an increase of 10.5% over the AED 490.3 million in Q1 2011).
• Group net profit for Q2 2011 was AED 316.6 million, after taking credit provisions and impairments of AED 235.8 million for the quarter (vs. a net profit of AED 301.6 million in Q2 2010 which was recorded after taking credit provisions and impairments of AED 134.6 million). Net profit for Q1 2011 was AED 303.2 million after taking credit provisions and impairments of AED 159.6 million.
• Bank net profit for Q2 2011 was AED 392.6 million, after taking credit provisions and impairments of AED 148.9 million for the quarter (vs. a net profit of AED 331.6 million in Q2 2010 which was recorded after taking credit provisions and impairments of AED 134.6 million). Net profit for Q1 2011 was AED 339.3 million after taking credit provisions and impairments of AED 151.0 million.

Balance Sheet: 30 June 2011 vs. 30 June 2010 and 31 December 2010
• Total assets as of 30 June 2011 were AED 72.3 billion, representing an increase of 5.8% compared to AED 68.3 billion at the end of 30 June 2010 (AED 75.3 billion at 31 Dec 2010).
• Net Customer Financing has increased to AED 48.1 billion, growing 6.5% over the AED 45.2 billion at the end of 30 June 2010 (AED 48.0 billion at 31 Dec 2010).
• Customer deposits grew by 2.5% to AED 53.2 billion, from AED 51.9 billion at the same time last year (AED 56.5 billion at 31 Dec 2010).

Capital Adequacy and Liquidity: 30 June 2011 vs. 30 June 2010 and 31 December 2010
• The Capital Adequacy ratio at 30 June 2011 stood at 16.1% vs. 16.6% recorded at 30 June 2010 (16.0% at 31 Dec 2010).
• The Customer Financing to Deposits ratio at 30 June 2011 was 90.5% vs. 87.1% at 30 June 2010 (84.8% at 31 Dec 2010).
• The Advances to Stable Funds ratio (regulatory ratio) improved to 87.8% at 30 June 2011 from 88.2% at 30 June 2010 (83.1% at 31 Dec 2010).

Abu Dhabi Islamic Bank (ADIB) posted a record net profit of AED 316.6 million for Q2 2011, an increase of 5.0% over the same period in 2010. Performance from the main banking business was particularly strong as the Bank’s net revenues grew by 17.1% to AED 875.6 million from AED 747.8 million in Q2 2010. The Bank has maintained its strong liquidity position and continues to respect the regulatory ratios, as the advances to stable funds ratio improved to 87.8% at the end of first half of 2011, while continued emphasis on managing the cost of funds saw the bank further reduce its higher cost deposits. In addition, strong year-on-year customer activity in the Retail Banking unit saw ADIB’s customer numbers increase by 13.6% since Q2 2010 to more than 439,000 customers. The growth in customer numbers and a more diversified product offering reduced the impact of the new UAE Central Bank guidelines and, along with ADIB’s enhanced Transaction Banking and Investment Banking franchises, saw a growth in fee and commission income of 62% versus Q2 2010. Furthermore, the Bank continued its conservative approach to provisioning, ensuring a healthy non-performing asset coverage ratio as well as introducing a quarterly impairment review of the portfolio held by the real estate subsidiary, Burooj Properties.

Emirate:  Abu Dhabi

Date: Aug 8, 2011

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