Chairman's Message

Chairman's Message

On behalf of ADCB's Board of Directors, I am pleased to report that the Bank has delivered another strong year of performance, particularly in light of the challenges of the low oil price environment.

Whilst profitability declined, 2016 saw good results in all other key performance metrics. Operating income of AED 8.495 billion was up 3% over 2015 and our return on equity remained strong at 15.7%.

We expect the heightened economic challenges to persist into 2017 and beyond. However, we believe that the Bank's proven strategy, commitment to service excellence, and strong, well-established governance standards will continue to serve shareholders well. With our resilient balance sheet and strong franchise, we remain focused on delivering sustainable growth and improving long-term financial performance and returns for shareholders.

Building on a Proven Strategy

In September, the Board reviewed and confirmed the Bank's strategy. This strategy was devised to build a robust and resilient leader in the UAE financial sector, and has proven to be highly effective in that regard. The strategy includes growth through a UAE-centric approach, a stable and conservative liability base, a culture of service excellence and efficiency, diligent risk management, and highly talented staff.

The Board also confirmed the importance of continuing investment in creating a superior and differentiated customer experience, through digitisation initiatives and sustained focus on customer service. We believe that the Bank has built a distinct advantage in customer service, and that maintaining and extending this advantage is critical to future success.

ADCB continues to make gains in cost control, whilst also driving efficiency throughout its operations with initiatives such as Itmam shared services and improvements to service standards and speeds. Gains in efficiency deliver both savings and enhancements in customer service. We believe the Bank's internal service model to be exemplary, with its sustained focus on improvement.

Well-capitalised and with a strong balance sheet, ADCB remains a healthy institution positioned as the leading bank focused primarily on the UAE. Our credit quality remains strong, and the Bank continues to aspire to grow based on prudent risk management.

Recommended Dividend

We continue to deliver good value to our shareholders. Since 2010, our dividend per share has grown year on year, while our payout ratio has consistently been around the 50% mark. As a result of ADCB's performance in 2016, the Board has recommended a cash dividend of AED 0.40 per share, translating to a payout of AED 2.079 billion, equivalent to 50% of net profit. This is subject to approval by the shareholders at the Annual General Meeting.

Continued Focus on Governance and Strengthening the Bank’s Culture

As in prior years, the Board remained active and engaged throughout 2016, conducting 62 full Board or Committee meetings. The Board also engaged regularly with management outside of full Board or Committee meetings.

Your Board is diverse and engaged, with a good mix of skills and strengths. In particular, your Board communicates well with management and constructively challenges management's activities.

The Board continues to work with management in our shared aim to excel in corporate governance. Having met or exceeded nearly all of the Basel Committee’s Guidelines on Corporate Governance, during 2017 the Board will commission an external review of the Bank’s governance framework aimed at helping the Bank to improve its governance practices even further.

Your Board believes that ADCB has developed a positive culture, and that management and staff are suitably incentivised to maintain and further improve the culture. The Board influences the Bank's culture by setting the appropriate tone in its deliberations (particularly on strategy and risk matters), and by its selection and incentivisation of senior staff. Your Board intends to make efforts to develop this further in 2017.

Looking Ahead

We expect 2017 to be another challenging year for financial services globally, and liquidity remains an ongoing concern. However, the UAE's economy remains well-diversified, strong and growing. Monetary policy remains accommodative. As a country and a market, the UAE is strongly positioned in the regional and global economy, and we are confident in its future. The Bank stands by its enduring commitment to the long-term economic development of the UAE.

During 2017 the Board will guide management in continued delivery of the Bank's strategy, oversee any transitions required as a result of the Basel III and IFRS 9 implementations, seek to continue leading the market in corporate governance practices, and continue to assess and develop the Bank's corporate culture.

Management has the full support of the Board as it leads the Bank through this challenging trading environment. Together we will continue to monitor conditions closely and will take actions as necessary.

Extending Our Appreciation

On behalf of the Board and all at ADCB, I extend our most sincere appreciation and gratitude to His Highness Sheikh Khalifa bin Zayed Al Nahyan, the UAE President and Ruler of Abu Dhabi; to His Highness Sheikh Mohammed bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces; to His Highness Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs; and to the UAE Central Bank.

I also extend the continued gratitude and appreciation of the Board to our shareholders, our valued customers, and the ADCB executive management team and employees for their continued dedication and commitment.

Eissa Mohamed Al Suwaidi