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19 September 2005

ADCB Announces Record Half Year Profits for 2005

ADCB announced a record net profit for the first half of 2005 of AED 844 million against AED 304 million for the same period last year, an increase of 178 per cent. On a quarterly basis profits grew by 293 percent to AED 623 million, compared to AED 159 million for the second quarter of 2004.

Operating profit for the first half of 2005 has risen to AED1,127 million, a 135 per cent increase over 2004. Total Assets also increased by 22 per cent from AED38.4 billion to AED46.8 billion during the first half of 2005.

Reflecting on the results, Eirvin Knox, CEO of ADCB said: "The first half of 2005 has seen all lines of business increase with strong growth in loans and related services. Net interest margin increased by over 50 per cent compared to the previous year and fee income increased by 4.5 times but was heavily impacted by fees generated from IPOs. Without the IPO fees, underlying fee income increased 15 per cent for the period.

The improvements in core net interest margin and fee income reflect strong business trends that are sustainable for the future as core business revenues increased over 70 per cent," added Knox.

Operating expenses have also seen a significant increase of 51 per cent, in line with the budget demonstrating continuing investment by ADCB in people, automated systems, improved distribution channels and new product launches.

"Many new business lines have been added in the first half of the year with revenue streams to hit in the second half of 2005. Among the new initiatives are the treasury and investment banking joint ventures with Macquarie Bank, the Nokhitha Fund and Al Dhabi Brokerage services. In addition, new product launches for consumer mortgages, credit cards and personal loans will all substantially increase core revenues in future periods", according to Knox.

The recently closed $900 million Medium Term Note (MTN) issued at a margin of Libor + 35 basis points was also a milestone last June. This was the first ever Euro Bond launched for an Abu Dhabi name and achieved the largest subscription and lowest pricing ever for any note issuer in the region.

Moody's Investor Services rated the ADCB MTN Aa3 which is the highest bank rating in the Middle East region and one notch above the UAE country rating, confirming the dramatic turnaround of ADCB.

Saeed Al Hajeri, Chairman of ADCB, added "the outstanding financial results of ADCB reflect the success of the restructuring of the bank that began in 2003 & 2004. In addition, he said "that the close working relationship between the Board and management has been a critical contributor to the rapid improvement at ADCB in the last two years."

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