Investing in ADCB

Investing in ADCB

Our long-term strategy has remained consistent, clear and focused. Driven by our ambition and discipline, we consistently refine and evolve our strategic pillars to ensure their relevance and effectiveness through the cycles of today's global financial markets. This approach ensures that ADCB can meet and exceed our ambitious goals; while at the same time positioning the Bank to deliver consistently strong performance, despite the rapidly changing business environment.

Our core pillars listed below have served to underpin our success, helping to build a resilient and innovative organisation with exceptional customer service.

  • Generate sustainable profit growth through a UAE-centric approach
  • Sustainability through liability growth and funding diversification
  • Superior customer experience through service excellence
  • Effective risk taking and management in line with a predefined risk appetite
  • Exploitation of digital for growth and efficiency - leveraging data analytics

We remain focused on the UAE, supporting our customers and the economy by creating and delivering sustainable value through our products and services.

In 2017, digital transformation was incorporated as one of our core pillars, underscoring our drive to enhance growth and efficiency by capitalising on technology. We are investing heavily in digital, from the systems we use in the Bank, to the innovative apps and services we offer our customers. By adopting and enhancing digital processes, our aim is to empower our customers, providing them with a banking experience that is simpler, faster and more secure, whilst helping to make us more efficient.

ADCB's 2017 results reflect the strength of our strategy and speak to the discipline and resilience of the Bank. The Bank's underlying performance and fundamentals remain strong with a return on average equity of 15% and capital adequacy ratio of 19.09% (Basel III) in 2017.

Each of our business segments demonstrated a strong underlying performance, and our Net Promoter Score (NPS)1 scores have continued to improve, with substantial increment in NPS points from 2014. The Bank-wide adoption of NPS has enabled us to ensure superior customer service by linking 30% of each employee's bonus to service excellence.

Our balance sheet remains resilient with healthy and diversified growth in loans backed by a disciplined and selective lending strategy. We continue with a granular build to our balance sheet, focusing on small and medium enterprises (SME), mid-corporates, and consumers. In view of prevailing market conditions, the Bank has placed a greater emphasis on expanding our secured loan book to diversify and build resilience in our asset portfolio.

The growth of our liability base was propelled by current and savings accounts (CASA), which constitute 43% of total customer deposits. We have been concentrating on CASA deposits because they provide stable, low cost deposits that help to hold down the overall cost of funding. Loan growth is funded through growth in customer deposits, which resulted in a significant improvement in the Bank's loan to deposit ratio since the launch of our strategy.

We have also focused on diversifying our revenue stream. Our fee and commission income continues to grow, reflecting a consistent trend. As we have diversified, our fees are no longer linked to lending only. The majority of our fees are driven by spending on our card base, trade finance, asset management fees and insurance commission.

We have maintained a solid discipline in managing costs and increasing operational efficiency across the Bank. Our cost to income ratio of 33.1% in 2017 was stable over 2016 and has consistently remained in this range for the past five years.

We continue to invest in our risk management capabilities. Our risk appetite is approved by the Board, and strict enforcement of discipline is also applied using tools such as RAROC (risk adjusted return on capital). Cost of risk for 2017 was 0.81% compared to 0.83% in 2016, within the 80bps range.

Despite the challenging operating conditions, our NPL and provision coverage ratios improved significantly to 2.12% and 162.9% respectively as at 31 December 2017.

ADCB adheres to the highest standards of corporate governance. In many respects, we are pioneers in our region. We continuously enhance, and improve our governance principles and framework, emphasising transparency, integrity, accountability and fairness. We believe high standards of corporate governance will contribute to our long-term success, encourage trust and engagement with our stakeholders, reinforce our culture.

Our success also means helping others and empowering financial literacy remains a significant objective for us. It also helps to contribute to the economy and stability of the UAE overall.

We remain well positioned to benefit from the long term growth prospects of the UAE economy and a well-executed strategy that has been tested relentless over the past nine years. Our deeply experienced and stable management team have provided outstanding leadership that continues to yield strong results.

1 "Net Promoter Score/NPS" are trademarks of Satmetrix Systems Inc., Bain & Company, and Fred Reicheld


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