Leadership Messages Group CEO’s Message
In testing times, ADCB has stood tall as a beacon of resilience and stability in the UAE banking sector. Inspired by our people, values and commitments to the nation, we have continued to deliver on our promises to our customers and other stakeholders in 2020, despite the unprecedented business and operating environment.
EMERGING STRONGER TOGETHER
Achieving a full-year net profit of AED 3.809 billion in 2020, ADCB delivered a 8.3% return on average tangible equity and a dividend pay-out ratio of 49%.1
In spite of the uncertainty inflicted on markets and communities around the world by the global COVID-19 pandemic, we have remained resolute and maintained a strong balance sheet. Indeed, the conviction, resilience and innovation in the Group’s response to these challenges have been highly encouraging.
ADCB has again proven that the Bank remains steadfast in adversity. A decade ago, we emerged from the global economic crisis fitter and stronger, and with a renewed focus on implementing best practice governance. Through our successful integration with Union National Bank (UNB) and Al Hilal Bank (AHB), we have clearly demonstrated the capacity of our people and systems to navigate through complexity to build a more powerful banking Group. Now, as the global community comes together to overcome the effects of the pandemic, ADCB is fully equipped to fulfil its commitments to support our stakeholders through the uncertain environment.
We have benefitted from an experienced and dynamic new Board of Directors in 2020, with H.E. Khaldoon Al Mubarak elected as Chairman.
Working in conjunction with our new Board, ADCB responded to the COVID-19 crisis in an urgent and rigorous manner, rolling out a comprehensive and highly successful programme overseen by our dedicated Business Continuity Management (BCM) team.
Having moved swiftly to implement a series of hygiene and safety measures, the BCM team maintained continuity through a combination of onsite and remote working that safeguarded our employees and customers. Throughout, we have sustained our high service standards while effectively managing operational and information security risks.
As a result of our efficient transition to remote working and acceleration of our digital transformation programme, not one of our services has been interrupted, ensuring full and seamless business continuity for all our customers. In light of our outstanding efforts through this critical period, we received the ‘BCI Middle East 2020 Continuity and Resilience Team Award’ from the leading global body in the field, Business Continuity Institute.
Ultimately, we have learned some valuable and enduring lessons from the events of 2020, developing an understanding of our priorities that will forever shape the way we live and work, while solidifying our path toward further digitisation and cost efficiency.
1 Subject to approval by shareholders at the Annual General Meeting.
SUPPORTING OUR COMMUNITY
As a major bank in the UAE with over one million customers, ADCB recognises the importance of building strong relationships across the broader community and is well equipped to be a positive role model, especially in difficult times.
With the launch of our ‘Not all heroes wear capes’ campaign, we allocated AED 5 million to express appreciation for the frontline healthcare workers battling coronavirus across the UAE. As a mark of our gratitude to these exceptional individuals, we offered the 35,000 healthcare workers who bank with us an unannounced refund on grocery purchases.
Given the inherent difficulties of the transition to home-based learning for school children, we also partnered with the Ministry of Education to back their distance-learning programme, donating AED 4 million to purchase and distribute laptops to students across the UAE.
To facilitate everyday processes for our micro-business and SME customers in what had been a difficult year for the sector, ADCB collaborated with Visa to launch ADCB Pace Pay in the third quarter of 2020. An innovative approach to enabling transition to cashless transactions, ADCB Pace Pay is the UAE’s first virtual point of sale (POS) app that allows businesses to collect card payments through their mobile phones instead of physical POS machines.
The Bank is proud to be part of the UAE Central Bank’s timely and critical economic support programme in response to COVID-19, the Targeted Economic Support Scheme (TESS). We were the first bank in the UAE to roll out relief measures for retail and corporate customers such as deferment of loan instalments, fee reductions and waivers, rescheduling of working capital facilities and temporary interest rate reductions.
ADCB extended a cumulative total of AED 11.018 billion of support to over 67,000 individuals and businesses from inception of TESS through to the end of December 2020. We are pleased to announce that the Bank has received AED 4.819 billion in repayments, resulting in outstanding deferrals reducing to AED 6.199 billion as of 31 December 2020. We would like to express our gratitude to the UAE Central Bank for their unwavering support during this critical time.
We also continued to engage with the Central Bank’s National Loan Scheme, designed to reduce the debt burden among UAE Nationals by offering lower interest rates. Between April 2019 and December 2020, we provided significant interest rate relief to approximately AED 4 billion worth of loans. The difference between the original contracted rate and the revised rate over the term of the loan was borne by the Bank and has benefitted over 2,500 Emirati customers.
AED 11.018 bn
Support to over 67,000 individuals and businesses from inception of TESS through to the end of December 2020
INTEGRATION AND SYNERGIES
2020 saw the completion of our historic integration of Union National Bank and Al Hilal Bank, significantly ahead of schedule and beating regional and global benchmarks, despite occurring at a time in which more than 90% of our staff were working remotely. A mere 11 months following the legal merger in May 2019, we had created a fully unified, powerful and resilient banking Group.
Following rigorous and meticulous planning, the IT integration and transfer of former UNB customer accounts to ADCB systems were concluded smoothly in April 2020 during the COVID-19 lock down. This represented the first full banking system migration and integration conducted remotely anywhere in the world, and its success illustrates the strength of our culture and values, as well as the commitment and resilience of our people.
This fast-tracked and highly effective process, completed without compromising the Bank’s exceptional customer service standards, resulted in two successive upward revisions of our run-rate synergy target to AED 1 billion. Having made significant progress in 2020, we are firmly on track to reach this target in 2021.
The unified and streamlined ADCB Group is now both better equipped to navigate macro-economic challenges and has the scale to invest further in the infrastructure, systems and people needed to deliver outstanding service and sustainable growth.
A RESILIENT STRATEGY FOCUSED ON DIGITAL
Our digital transformation programme, which has served us well in the face of the global pandemic, lies at the core of our new five-year strategy for growth and increased profitability.
Having completed a Group-wide review, we have set ambitious performance-linked goals across the whole organisation to ensure ADCB enhances efficiencies and drives customer-centric digital innovation, while remaining true to our commitment to robust governance.
We made strong progress in 2020. Our digital platforms have gained momentum, with the rate of adoption by our customers increasing substantially. Registered users on the Bank’s mobile and internet banking increased by 19% over last year to 827,000 customers. ADCB is investing significantly in our digital platforms, with 62 successful digital launches in 2020 including new products, services and enhanced app features, double the total in 2019.
Meanwhile, Al Hilal Bank is spearheading digital transformation in the Islamic Banking retail segment, propelled by a bold vision to become the first fully digital Shari’ah-compliant retail bank in the UAE.
ADCB remains focused on its core geography and core businesses, as we exit the majority of our overseas offices and operations whilst retaining our presence in Egypt — rebranded as ADCB Egypt in 2020 — and in Kazakhstan, through Al Hilal Bank.
827,000
Registered mobile and internet banking users, up 19% from 2019
DELIVERING CUSTOMER EXCELLENCE
As exemplified by the delivery of uninterrupted services during the difficult circumstances in 2020, our dedication to our customers is second to none.
According to the results of an ongoing, comprehensive series of Fast Feedback Surveys, our customer loyalty continues to grow steadily. In 2020, ADCB achieved a net promoter score (NPS2) of 67%, representing a 27 NPS points increase over a 2014 survey baseline, proving that we continue to listen to, and meet, the needs of our customers by building a better ADCB every day.
Furthermore, a major report3 in April 2020 showed that ADCB recorded the highest increase in brand value of any company in the UAE over a 12-month period.
2 In line with our digital transformation strategy and the impact of COVID-19, NPS methodology was changed to digital channels in H2’20, therefore reported NPS scores are for Q1’20 only.
3 Brand Finance UAE 25 2020 report, April 2020.
RESPONDING PROACTIVELY TO CHALLENGES
In the first quarter of 2020, London Stock Exchange-listed NMC Health PLC made a series of disclosures that revealed significant misrepresentation of its debt position in its financial accounts.
As one of more than 80 major local, regional and international financial institutions that extended credit to NMC Health, ADCB took a decisive and proactive approach to addressing the issue to defend the interests of the Bank and its stakeholders.
By successfully filing in the UK High Court for NMC Health to be taken into administration, ADCB initiated an orderly process for the turn-around of the company and repayment of debt, while ensuring the continuation of uninterrupted healthcare services at a critical period as the COVID-19 became a global pandemic.
ADCB is working closely with the administrators and other creditors on a restructuring plan that safeguards operations, builds value and protects the Bank’s interests. The company adopted a three-year business plan, with ADCB arranging and participating in a financing facility to ensure operational continuity and to allow for restructuring. The financial performance of NMC Health improved notably in the second half of 2020, and the company has successfully pursued the sale of non-core assets.
We continue to actively explore all avenues to resolve the NMC Health issue, in accordance with relevant international practices and accounting standards.
OUR PEOPLE & CULTURE
As we look back over the achievements of 2020, it becomes clear that placing trust in our people and the systems we have built together was entirely the right approach. I am exceptionally proud of our employees and the way they have responded to such unique challenges.
Together, we have successfully implemented an extensive series of new procedures and safety measures, whilst ensuring compliance requirements were fully met. In short, our people delivered when it mattered most, driven by our deeply felt culture and guiding values of integrity, care, ambition, respect and discipline.
I am therefore pleased to report that our people feel safe and secure, and are supportive of the way we work. In our latest employee engagement survey in October 2020, we achieved an overall engagement index score of 87%, which was 8% higher than when the survey was last conducted in 2018. 91% of our entire workforce responded to the survey, demonstrating how the challenges faced this year have only served to bring us closer together.
I am exceptionally proud of our employees and the way in which they have responded to such unique challenges.
AN EMIRATISATION LEADER
In line with our approach to stable and sustainable growth, ADCB Group continues to be a major employer of Emiratis in the UAE banking sector, with 1,482 UAE Nationals in the full-time employee base. UAE Nationals occupy 30% of positions on our Executive Committee and 95% of management roles across our branches.
True to our legacy of promoting home-grown talent, we consistently exceed the Emiratisation targets set by the UAE Central Bank and have continued to recruit and train high-calibre Emiratis virtually during the lockdown. We also remain fully committed to empowering Emirati women, who account for 78% of our UAE National workforce today.
Meanwhile, Al Hilal Bank continues to lead the entire sector in terms of its Emiratisation credentials. Today, UAE Nationals account for 50% of the Bank’s full-time staff.
Among our most prominent plans for 2020–2021, we aim to build a base of talented UAE Nationals that can influence and contribute to the Group’s strategy and digital transformation programme.
LOOKING TO THE FUTURE
As we enter 2021, resilience has been complemented by a growing sense of hope and ambition, buoyed by our collective success in overcoming the entirely unprecedented challenges of the past year.
Our ambitious goals remain — we are committed to our digital transformation, as well as to realising growth and increasing market share whilst maintaining a disciplined approach to controlling costs and achieving efficiencies.
As a major financial institution in the UAE, ADCB is proud to support the continued investment in social and economic initiatives undertaken to promote the nation’s sustainable growth, creating lasting positive change for the benefit of our stakeholders and the wider community.
Naturally, our priorities in 2021 are also to stay safe and healthy — for our families, our teams and the communities we serve — and to be confident in the invaluable lessons we have learned in 2020. However, far from focusing on what we have overcome, our sights are fixed firmly on the horizon — on the opportunities to experiment and innovate, whilst always remaining true to the discipline and values that have seen us through a singularly uncertain and turbulent year.
I would like to take this opportunity to thank both our Chairman, H.E. Khaldoon Al Mubarak, and his predecessor, H.E. Eissa Mohamed AlSuwaidi, who stepped down in 2020, as well as the members of our Board and our executive management team for their leadership and continuous support this year. I also wish to thank all our customers for their trust and every one of our employees who have worked so hard to turn this unique and challenging year into a positive story for our Bank.
ALA’A ERAIQAT
Group Chief Executive Officer
Member of the Board of Directors
