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Abu Dhabi: Abu Dhabi Commercial Bank (ADCB) yesterday reported Dh655.4 million in net profit for the second quarter of 2008, a 29.5 per cent increase compared to the same period last year.
It also revealed a 20 per cent growth in the first half earnings, which amounted to Dh1.172 billion, as compared to Dh976.4 million by the end of June 2007.
"The bank is continuing to strengthen its position as one of the leading financial institutions in the UAE. Yet, we maintain our social responsibility, which constitutes a crucial element in our growth strategy," commented Saeed Al Hajeri, ADCB's chairman.
The bank still ranks as the country's third-largest in terms of assets which totaled Dh128 billion, compared to Dh96 billion by the first half of last year, a 33.5 per cent increase.
Emirates NBD remains, by far, the largest bank in the UAE with a comfortable margin, reporting Dh277.4 billion worth of assets in March 2008, followed by the National Bank of Abu Dhabi which reported total assets worth Dh157.23 in the first quarter, and is expected to disclose the second quarter results next Thursday.
"ADCB has an ambitious plan to double its portfolio, including its assets in two years, especially after the acquisition of a substantial share in RHB Malaysia," Ervin Knox, the bank's chief executive officer (CEO), told the shareholders during the bank's last annual general meeting.
The bank's operating income surged by 45 per cent from Dh1.478 billion in June 2007 to Dh2.142 billion, well in line with the CEO's promise.
"The strong growth in revenues is attributed mainly to a 45 per cent surge in fee income, and a staggering 227 per cent increase in foreign exchange and derivatives income," Mohammad Ali Yasin, managing director of Shuaa Securities explained.
"These are generated through the bank's treasury, as well as other units such as wealth management, where the bank was able to capitalise on the appreciation of the euro against the dollar," he added.
ADCB was the only bank to provision against losses incurred from the sub-prime mortgage crisis in the US last year, which reflects the diversity of its portfolio.
"However, cautiousness is required, especially when in investing in derivatives, currencies, and commodities, because at the end of the day, it is the shareholders who pay the price," Yasin said.
The bank maintains that the growth is attributed to the expansion of its clientele and enhanced performance.
"The growth was a result of the excellent performance and expanding customer base," Knox said.
Loans
Loans and advances grew by 34 per cent from Dh68 billion to Dh91 billion during the period, as well as stable deposits which recorded a 36 per cent increase from Dh71 billion to Dh97 billion.
"ADCB gained 1.2 per cent yesterday to close at Dh5.02, and according to these results, the bank is trading at a price to earnings ratio of 10 X, a very attractive rate, while we can expect a better performance during the second half, given the robust growth of the banking sector in general," Yasin said.
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