CEO’s Report
Core strategy yields results
The record results of 2011 bear testimony to the successful execution of the turnaround strategy adopted two years ago, after the global and regional economic crisis. With clear focus on the domestic market and core business lines, financial performance improved across the board indicating that the health of the ADCB franchise is stable
and the turnaround sustainable.
Ala’a Eraiqat
Chief Executive Officer
Net profit of AED 3.045 billion in 2011 was a record – up significantly from AED 391 million a year earlier. However, the quality of the results is what underlines the inherent strength of the franchise. Capital adequacy strengthened considerably in conjunction with improvement in liquidity, and overall asset quality and disciplined cost management. This prompted a ratings upgrade by Standard and Poor’s to A/A-1.
Strong operational performance across all areas of the Bank was endorsed by several local and international industry awards. Our retail banking business was honoured as the ‘Best Retail Bank in the UAE’ for the fourth successive year by The Asian Banker while the SME business received two awards from The Banker Middle East – ‘Best Commercial Bank’ and ‘Best SME Account’.
The most notable landmark for the year was the sale of our equity stake in RHB Capital Berhad in Malaysia at a profit of AED 1.3 billion. Seamless integration of the retail banking business of the Royal Bank of Scotland in the UAE, acquired in 2010, was another key highlight of 2011, positioning ADCB as a retail banking powerhouse in this market. Through a joint venture with Bank of America Merrill Lynch that took shape during the year, we are now able to provide full-service transactional banking services worldwide and the launch of our branch in Jersey in December 2011 introduced offshore banking services to our retail customers.
A significant contribution to the bottom line was delivered from the Treasury and Investment Group, which is now benefiting fully from the advantages of being managed entirely in-house. ADCB successfully placed a USD 500 million Sukuk for the first time and a conventional bond issue was positively received in the market, highlighting increased global investor confidence and a healthy appetite to invest in our business.
In response to the UAE Central Bank directive on retail banking fees and charges, ADCB went a step further by introducing “Free Banking” – removing charges for a wide range of personal banking services. This pioneering move has underlined our pledge to be a socially responsible bank, focusing our efforts on benefiting the community we serve.
The Islamic Banking business gained critical mass validating our integrated approach to Islamic Banking with a common distribution infrastructure offering both Islamic and conventional products and services. Overall growth in the Islamic business has been very encouraging, accounting for much of the year’s expansion in retail, SME, and corporate banking.
In summary, our results in 2011 reflect the effectiveness of our strategy and the efficiency of execution – building world-class capabilities that have earned us the respect of regulators, shareholders, competitors, and most of all our customers. We have fostered a culture of transparency, teamwork, and bias for action, rooted in talking to our customers, responding to their needs, and keeping in touch with reality.
At ADCB, it has always been our endeavor to use global standards as the barometer of success. To this end we engaged the services of two internationally renowned consulting institutions to review the operations of the Bank across Retail, Wholesale, and Treasury so as to identify potential performance improvement opportunities. The study indicated that ADCB performance standards were broadly in line with global benchmarks. This gives confidence that the Bank is now well-positioned to take advantage of future improvements in the domestic economy and potential international opportunities. We look forward to 2012 with renewed energy and optimism. As we speak, a five- year strategy for the Bank is taking shape with a view to building a stronger and more resilient ADCB.
On behalf of the executive management team, I take this opportunity to express our sincere appreciation and gratitude to all our shareholders and the Board of Directors for their support; to our customers for their custom and trust; and to our employees for all the hard work that made 2011 such a success.
Ala’a Eraiqat
Chief Executive Officer
Strong operational performance across all areas of the Bank was endorsed by several local and international industry awards. Our retail banking business was honoured as the ‘Best Retail Bank in the UAE’ for the fourth successive year by The Asian Banker while the SME business received two awards from The Banker Middle East – ‘Best Commercial Bank’ and ‘Best SME Account’.
The most notable landmark for the year was the sale of our equity stake in RHB Capital Berhad in Malaysia at a profit of AED 1.3 billion. Seamless integration of the retail banking business of the Royal Bank of Scotland in the UAE, acquired in 2010, was another key highlight of 2011, positioning ADCB as a retail banking powerhouse in this market. Through a joint venture with Bank of America Merrill Lynch that took shape during the year, we are now able to provide full-service transactional banking services worldwide and the launch of our branch in Jersey in December 2011 introduced offshore banking services to our retail customers.
A significant contribution to the bottom line was delivered from the Treasury and Investment Group, which is now benefiting fully from the advantages of being managed entirely in-house. ADCB successfully placed a USD 500 million Sukuk for the first time and a conventional bond issue was positively received in the market, highlighting increased global investor confidence and a healthy appetite to invest in our business.
In response to the UAE Central Bank directive on retail banking fees and charges, ADCB went a step further by introducing “Free Banking” – removing charges for a wide range of personal banking services. This pioneering move has underlined our pledge to be a socially responsible bank, focusing our efforts on benefiting the community we serve.
The Islamic Banking business gained critical mass validating our integrated approach to Islamic Banking with a common distribution infrastructure offering both Islamic and conventional products and services. Overall growth in the Islamic business has been very encouraging, accounting for much of the year’s expansion in retail, SME, and corporate banking.
In summary, our results in 2011 reflect the effectiveness of our strategy and the efficiency of execution – building world-class capabilities that have earned us the respect of regulators, shareholders, competitors, and most of all our customers. We have fostered a culture of transparency, teamwork, and bias for action, rooted in talking to our customers, responding to their needs, and keeping in touch with reality.
At ADCB, it has always been our endeavor to use global standards as the barometer of success. To this end we engaged the services of two internationally renowned consulting institutions to review the operations of the Bank across Retail, Wholesale, and Treasury so as to identify potential performance improvement opportunities. The study indicated that ADCB performance standards were broadly in line with global benchmarks. This gives confidence that the Bank is now well-positioned to take advantage of future improvements in the domestic economy and potential international opportunities. We look forward to 2012 with renewed energy and optimism. As we speak, a five- year strategy for the Bank is taking shape with a view to building a stronger and more resilient ADCB.
On behalf of the executive management team, I take this opportunity to express our sincere appreciation and gratitude to all our shareholders and the Board of Directors for their support; to our customers for their custom and trust; and to our employees for all the hard work that made 2011 such a success.
Ala’a Eraiqat
Chief Executive Officer