Strategy
The Difference Is...
Focus
ADCB’s strong results come from a well-defined, well-executed strategy. Our 2015 performance, in a challenging economic environment, reflects our consistent pursuit of sound, proven strategies. The result was a year of noteworthy progress. We delivered significant growth and rising profitability; expanded our portfolio of products and services; and honoured our commitments to consumers, businesses, shareholders, employees and the communities we serve.
Our strategy is aimed at achieving an ambitious goal: to create the most valuable bank in the UAE. Realising that ambition requires a sustained, rigorous commitment to providing exceptional customer service, a sound business model focused on delivering profitable growth balanced by sound risk management, superior long-term returns for shareholders, and an excellent workplace environment for employees. These attributes differentiate ADCB from other financial institutions and enable us to deliver enduring value for all our stakeholders.
Our well-defined and consistently executed strategic platform, adopted in 2009, is supported by five strong pillars:
Measuring Against Strategy
We rigorously measure the progress of our strategy to create the most valuable bank in the UAE through a range of performance measures, including those below.
STRATEGIC AIM
Most valuable bank in the UAE
HOW WE MEASURE OUR STRATEGIC KPIs
Total Shareholder Return (TSR)
Calculated as the growth in share price plus dividends paid to shareholders during the year. TSR is recognised as one of the best measures of achieving a good investment return.OUR 2015 PERFORMANCE
6%
Total Shareholder Return
STRATEGIC AIM
Most profitable
HOW WE MEASURE OUR STRATEGIC KPIs
Return on Average Equity (ROAE)
Calculated as the profit attributable to equity shareholders as a percentage of average shareholders’ equity.
To increase ROAE, we focus on growing our business where risk adjusted returns are maximised and capital is efficiently deployed.
OUR 2015 PERFORMANCE
20.3%
Return on Average Equity
STRATEGIC AIM
Most resilient
HOW WE MEASURE OUR STRATEGIC KPIs
Basic Earnings per Share (EPS)
Calculated as profit attributable to equity shareholders of the Bank as divided by the weighted average of the equity shares in issue during the year.
OUR 2015 PERFORMANCE
AED0.93
Basic Earnings per Share
STRATEGIC AIM
Most efficient
HOW WE MEASURE OUR STRATEGIC KPIs
Cost to Income Ratio
Calculated by dividing operating expenses by operating income. We made important changes to our core processes and introduced specialist management techniques to do more with less, and thus became more efficient whilst still investing in our businesses.
OUR 2015 PERFORMANCE
34.2%
Cost to Income Ratio
STRATEGIC AIM
Best customer service
HOW WE MEASURE OUR STRATEGIC KPIs
Net Promoter Score (NPS)
NPS is based on customers’ likelihood to recommend ADCB to a friend or colleague.
NPS is calculated as the percentage of customers who are promoters, rating the Bank a 9 or 10 on a 0-to-10 point scale, minus the percentage who are detractors, rating it a 6 or lower.
OUR 2015 PERFORMANCE
Retained No. 1 position among our peers across our Wholesale, Mid-corporate, Treasury and Private account segments
The Difference Is Vision for the Future
ADCB’s well-defined strategic framework and solid financial foundation have created a clear path towards our ambition and empowered us to deliver consistently strong performance in a rapidly changing business environment. Our strategic pillars have been in place since 2009 and are continually refined to ensure that they remain relevant and effective in a dynamic global financial marketplace. The effectiveness of our strategy is closely monitored by the Board of Directors using a range of performance measures and key financial gauges.
As we look ahead, we remain focused on creating the most valuable bank in the UAE by continuing to build our retail operations, growing our wholesale franchise in select segments, maintaining our emphasis on shareholder value, pursuing a disciplined risk management approach, and delivering a customer experience that is second to none.
Our ambition
To create the most valuable bank in the UAE
Our strategy
- 1Growth through a UAE-centric approach with controlled internationalisation
- 2Sustainability through liability growth
- 3Maintain a culture of service excellence and efficiency
- 4Manage our risk in line with a predefined risk strategy
- 5Success through staff
- 01 UAE-CENTRIC
- 02 SUSTAINABLE GROWTH
- 03 CUSTOMER-CENTRIC
- 04 RISK-AWARE
- 05 TALENT-DRIVEN
UAE-CENTRIC
01
The Difference Is a UAE-Centric Approach
ADCB’s sharp focus on serving the UAE — a dynamic, growing market of significant business potential — is one of our major differentiating strengths. Our vision is to build the biggest retail bank in the UAE, and the largest wholesale franchise in our chosen business segments, by maintaining and consolidating our business in the UAE.
Our UAE-centric focus has given ADCB a strong domestic franchise and extensive, high-quality brand recognition, with 49 branches in the UAE. Today, we serve a growing customer base of more than 650,000 retail customers and over 52,000 corporate clients. ADCB is also committed to investing in the UAE’s long-term social and economic infrastructure, in line with the UAE Vision 2021 and the Abu Dhabi Economic Vision 2030.
The strengths of our Consumer and Wholesale Banking franchises form the foundation of our solid position in the UAE. We focus on serving the financial needs of UAE households, businesses and communities in a disciplined manner and with the highest standards of integrity. As at 31 December 2015, 90% of our loan book (gross) and 45% of our investment portfolio was in the UAE.
We have a highly selective presence outside the UAE, primarily to expand the financial solutions available to our UAE customers. In addition to two branches in India and one in Jersey, we recently opened representative offices, one in London and one in Singapore, that allow us to capitalise on global economic trade and investment flows. We also have strategic partnerships in place with Bank of America Merrill Lynch and Banco Santander to provide a global network for our clients.
GROWTH THROUGH A UAE-CENTRIC APPROACH, WITH CONTROLLED INTERNATIONALISATION
SUSTAINABLE GROWTH
02
The Difference Is Sustainability through Liability Growth
ADCB’s liability structure continues to deliver sustainable profitability and growth. Our customer deposits increased 14% in 2015 and comprised 72% of total liabilities as of 31 December 2015.
Our balance sheet strength benefits significantly from current account and savings account (CASA) deposits. Our award-winning and world-class cash management services help clients make their businesses more efficient and automated, reducing administration and risk. These services also deliver CASA balances for ADCB — a strategic advantage over fixed deposits, as CASA deposits provide stable, low-yield/low-cost customer deposits that help to hold down our overall cost of funds.
CASA deposits were 44% of total customer deposits at year-end 2015. ADCB’s cost of funds for 2015 was 0.92% compared to 2.64% in 2010. The increase in CASA deposits also resulted in a meaningful improvement of the Bank’s loan to deposit ratio, from 115.7% in 2010 to 107.1% in 2015.
CURRENT ACCOUNT AND SAVINGS ACCOUNT (CASA) DEPOSITS AS A PERCENTAGE OF TOTAL CUSTOMER DEPOSITS
CUSTOMER-CENTRIC
03
The Difference Is a Culture of Service Excellence and Efficiency
ADCB’s customer-centric approach is embodied by a culture that places the needs of customers first, setting world-class professional standards. We believe that helping our customers succeed financially is the key to our own success. As such, we continually work to enhance relationships, build loyalty and earn trust.
Customer satisfaction is measured and guided by our use of the Net Promoter Score (NPS). NPS measures the propensity of customers to recommend a business to their friends and associates, and as such is well-recognised as a meaningful measure of customer advocacy. We employ NPS as a single currency throughout the Bank. Every member of our staff has at least 30% of his or her annual performance objectives tied to delivering a superior customer experience. We are extremely proud that ADCB’s NPS scores continued to rise throughout 2015.
Our commitment to customer satisfaction is maintained and enhanced by our Customer Experience Working Group, chaired by our CEO, and championed every day across our organisation by the people of ADCB. In addition, throughout the Bank we have created a customer-first culture by following the Bank’s ‘Our Promise’ guidelines, a set of principles and commitments embraced by all employees when dealing with customers.
We continue to enhance our customer-centric culture by continuing to invest in technology and simplifying our businesses. In 2015, we have digitised many processes to provide a better banking experience for our customers, whilst delivering best-in-class service.
TOWARDS SERVICE EXCELLENCE
*Source: 2015 survey conducted by independent third-party research agencies for ADCB customers
RISK-AWARE
04
The Difference Is Predefined Risk Strategy
Robust risk management protocols are vital to preserving and protecting ADCB’s long-term financial strength and growth potential. The foundation of these protocols is built upon a rigorous control framework, disciplined risk practices and a strong risk management culture that guides each and every employee. Our Risk Management team strengthened over the past few years, comprising professionals with extensive international and regional experience. We continue to improve our Risk Management function, corporate governance and transparency through regular reviews of our risk policies and procedures. Our risk appetite is always in alignment with our overall strategy to maintain the quality of our portfolio and our long-term growth prospects. As a result, our cost of risk improved significantly, from 2.61% in 2010 to 0.29% in 2015.
We actively monitor and assess macroeconomic conditions and realign policies and practices to ensure our portfolio remains robust. We continue to enhance our risk management capabilities through upgraded risk management systems; expanded portfolio exposure reporting and analysis techniques; standardised stress tests; and assessments of ratings migration.
We are committed to maintaining a disciplined risk profile. Our effectiveness and efficiency are reflected in, amongst other things, three key elements: (i) a conservative balance sheet; (ii) a clear risk governance structure and strong risk management culture; and (iii) a strong capital and liquidity position.
COST OF RISK
TALENT-DRIVEN
05
The Difference Is Success through Staff
ADCB recognises the contribution of its staff members to its long-term profitability and success. Outstanding service and financial performance can best be attained and maintained through a highly talented and motivated workforce. Thus, building an engaged, healthy and inclusive workforce is crucial for the successful realisation of our strategic aspirations. Our strategy for enhancing the Bank’s “human capital” is to inspire employees to develop continuously and to make their own unique contribution to ADCB’s continued success.
Our focus, to build partnerships with customers that last a lifetime, is entirely dependent upon the talent and service of our people. To retain key staff members, we periodically review their compensation and incentives and reward them in accordance with their performance. ADCB also remains focused on attracting talent to key new roles within the organisation through a competitive compensation structure, investment in our people and a commitment to building meaningful career paths for staff.
The success of our efforts can be seen in our best-in-class retention rate amongst our peers. Our professional development, function-specific training academies and career advancement opportunities work together to promote individual growth and institutional excellence.
TRAINING HOURS
ADCB Annual Report 2015