ADCB made a net profit of AED1.45billion ($395million) in the three months ending June 30
ABU DHABI- Abu Dhabi Commercial Bank, which formally merged with two other banks this year, reported an 11% drop in second quarter profit on Sunday, as both interest income and non interest income declined.
ADCB's result came after two of the biggest banks in the United Arab Emirates - First Abu Dhabi Bank FAB.AD and Emirates NBD- reported higher quarterly earnings showing signs of resilience against the country's sluggish economy.
ADCB's core business activities showed signs of weakness.
Net interest income fell 7% to 2.59 billion dirhams, while non-interest income dropped 9% to 656 million dirhams.
ADCB said non-interest income in the first half of the year declined by 6%, primarily due to a drop in fees and commission. hit by lower loan processing fees.
ADCB made a net profit of 1.45 billion dirhams ($395 million) in the three months ending June 30, compared to 1.62 billion dirhams in the prior-year period, it said in a statement. EFG Hermes had projected a net profit of 1.3 billion dirhams for the second quarter.
This is the first combined proforma financials after ADCB merged with two smaller banks – Union National Bank and Al Hilal Bank.
ADCB, the third largest bank by assets in the United Arab Emirates, said the integration is on track for completion by end-2020 with cost synergies of 69 million dirhams already realised, representing 11% of the total target of 615 million dirhams scheduled for full year 2021.
One-off integration costs at 87 million dirhams to date are in line with planned expenditure of 800 million dirhams to complete integration, the bank said.
Loans and advances decreased 4% to 251 billion dirhams ending June 2019 from end-December 2018. Customer deposits also shrank 4% to 273 billion dirhams in the same period.
The bank, with assets of 417 billion dirhams and over one million customers, has made a decision to exit expensive time deposits while continuing to focus on growing CASA (current account savings account) deposits.
"As would be expected in such transactions, certain matters arose during the due diligence process," said Ala'a Eraiqat, chief executive of ADCB.
"ADCB Group will carry out a thorough assessment of the probable associated impact, which will be fully quantified and reported at the year-end," he said in the statement, without elaborating.
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