Abu Dhabi Islamic Bank · ADX:ADIB
Abu Dhabi Islamic Bank — H1 2023 Earnings Presentation
55 slides from Abu Dhabi Islamic Bank's earnings presentation, August 2023
Slide 1: Investor Presentation 1H 2023
ADIB IR Website Investor Presentation 1H 2023 IR App Download link: August 2023
Slide 2: Contents
Contents 1H 2023 Investor Presentation 1 ADIB Profile 2 Operating Environment 3 Strategy 4 ESG 5 Financial Performance 6 Segmental Performance 7 Performance Track Record 8 Appendix 2
Slide 3: ADIB Profile
1 2 ADIB Profile 3 4 5 1H 2023 Investor Presentation 6 7 8 3
Slide 4: Abu Dhabi Islamic Bank Today
Abu Dhabi Islamic Bank Today ADIB is a digitally advanced Islamic Bank serving as a lifelong partner for its customers, colleagues and community #1 Bank for UAE Nationals A Leading Islamic Bank Advanced Digital Bank Leader in Customer Satisfaction 15% AED 182bn 76% #1 in UAE UAE retail market share
Slide 5: ADIB Key Highlights
ADIB Key Highlights ADIB is a leading UAE Bank and one of the largest Islamic banks world-wide Presence in 7 markets Value Drivers (1H 2023) Market leader Iraq ROE ROA CASA Ratio Net Profit Margin Cost of Risk United Kingdom Qatar Egypt United Arab Emirates 24.9 % 2.87 % 65.9 % 4.41 % 0.48 % Sudan S
Slide 6: Business Segments
Business Segments ADIB’s business is comprised of 4 main segments % of Group Revenue Business Segment Description Targets individuals and SME entities with main focus on UAE Nationals and mass affluent segment 56% Retail Banking Product ranges offered include everyday banking products such as curren
Slide 7: Consistent dividend distribution
Consistent dividend distribution ADIB consistently distribute dividends with average yield of 4.5% Shareholder Return Metrics 10 12% 9 8 9.9% 10% 7 8.0% 8% 6.2% 7.6% 6 7.0% Share Price 6.5% 5 5.1% 6% 4.4% 5.4% Dividend Yield 4 4.1% 4.5% 3 4% 2 2% 1 0 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2
Slide 8: Market Metrics & Ownership Structure
Market Metrics & Ownership Structure ADIB is a liquid stock with 17% foreign ownership Key Metrics* Share Price (AED) 12.00 Market Cap Free Float 52 w High 10.64 AED 39 bn 40% AED 11.9 10.00 8.00 6.00 5.48 Velocity FOL Limit 52 w Low 15% 40% AED 7.34 4.00 2.00 Jun 2021 Sep 2021 Dec 2021 Mar 2022 Jun
Slide 9: Digital Banking
Digital Banking Progress made on ADIB's digital strategy is reflected in UAE's highest customer ratings and other key digital metrics. Digitally Active Customers (%) Digital Sales (% of Total) 22 ITM machines Fully digital application 80% 76% 60% deployed across the process for cards, 75% 71% 47% 48
Slide 10: Recent Achievements and Accolades
Recent Achievements and Accolades ADIB's recognition for excellence in Islamic banking Awards received in 2022 Forbes IFN IFN #1 UAE bank on Forbes' List of Best Islamic Bank in the UAE, Most Innovative Islamic Bank the World’s Best Banks 2021 Iraq and Egypt Global Finance IFN Digital Banker Best Is
Slide 11: Outlook and Guidance
Outlook and Guidance Solid financial & strategic foundations drive a promising outlook for 2023 Market Outlook Management Guidance 1H 2023 Actual FY2023 Guidance Solid GDP growth Gross Financing Growth Real GDP growth (%) Executing ADIB’s growth strategy 2% YTD 5% to 8% 7.4% against the backdrop of
Slide 12: Operating Environment
1 2 Operating Environment 3 4 5 1H 2023 Investor Presentation 6 7 8 12
Slide 13: Macroeconomic Overview
Macroeconomic Overview Resilient UAE economy despite global uncertainties Real GDP growth driven by rising oil prices, domestic consumption and liquidity Rising oil prices to improve economic outlook Brent Price / Barrel (Avg) (USD) 101.5 92.0 71.0 64.0 70.4 42.3 2018 2019 2020 2021 2022 2023 Improv
Slide 14: UAE Banking Sector Update (1)
UAE Banking Sector Update (1) Modest financing growth in recent years reflecting economic conditions and banking sector penetration Financing, Advances & Overdrafts (AEDbn) Size of the UAE Banking Sector UAE Gross Banking Assets UAE Gross Banking Assets +4% (Apr 2023) (as % of GDP) 1,832 1,866 1,851
Slide 15: UAE Banking Sector Update (2)
UAE Banking Sector Update (2) Moderation of sector liquidity , higher rates environment improving profitability Capitalization (%) Liquidity (%) 19% 90% 79.1% 76.4% 75.6% 17.5% 80% 79.4% 18% 17.3% 17.8% 70% 74.8% 16.9% 17% 17.1% 60% 16.6% 50% 16% 16.0% 40% 16.3% 16.1% 15% 15.8% 14.8% 30% 18.0% 17.3%
Slide 16: ADIB Strategy
1 2 3 ADIB Strategy 4 5 1H 2023 Investor Presentation 6 7 8 16
Slide 17: ADIB Strategy
ADIB Strategy Our purpose, values and vision are supported by a clear set of strategic goals Purpose Lifelong partner for customers, colleagues and community Vision To be the world’s most innovative Islamic bank We keep it We are We work for We nurture hospitality We are Values simple and sensible t
Slide 18: ADIB 2025 Strategy: Continuous Innovation
ADIB 2025 Strategy Continuous Innovation in Sharia-compliant banking products Continuous Innovation Segment Digital Sustainable Continuous Focused Excellence Future Innovation ▪ Innovate Sharia-compliant banking products ▪ Re-engineer our processes ▪ Develop Islamic banking experts ▪ Launch digital
Slide 19: ADIB 2025 Strategy: Segment Focused
ADIB 2025 Strategy Build on strength in Emirati retail segment and expand underweight business segments Segment Focused Continuous Segment Digital Sustainable Innovation Focused Excellence Future ▪ Grow and strengthen existing segments ▪ Focus on Emirati throughout their lifecycle ▪ Develop Business
Slide 20: ADIB 2025 Strategy: Digital Excellence
ADIB 2025 Strategy Digital Excellence Continuous Segment Digital Sustainable Innovation Focused Excellence Future ▪ Delivering operational and sales efficiency by migrating all sales and services to full end-to-end digital channels ▪ Build a modern technology foundation for staff ▪ Become a data-dri
Slide 21: ADIB 2025 Strategy: Sustainable Future
ADIB 2025 Strategy Embed sustainability and ESG frameworks into our existing Islamic banking DNA Sustainable Future Continuous Segment Digital Sustainable Innovation Focused Excellence Future ▪ Focus on employee wellbeing ▪ Develop ESG risk framework and policies ▪ Develop Group sustainability strat
Slide 22: Update on Strategy Progress
Update on Strategy Progress ADIB continues to deliver on its strategy in 2023 Continuous Key product launches Amwali Youth Account Asset Management Payment Service Innovation • Salary cash back campaign • Digital on-boarding for business banking 10,701Accounts $147 mn AED 3.9 mn • New cash back card
Slide 23: ESG Strategy
1 2 3 ESG Strategy 4 5 1H 2023 Investor Presentation 6 7 8 23
Slide 24: Key Pillars of ADIB's ESG Strategy
Key Pillars of ADIB’s ESG Strategy ADIB is committed to supporting the UAE’s ambitious agenda to promote sustainable growth and development We commit to maximise our positive impact through green/sustainable product Maximising Positive Impact Lifelong Partner for our We commit to adopt innovative an
Slide 25: Key Pillars of ADIB's ESG Strategy
Key Pillars of ADIB’s ESG Strategy ADIB is committed to supporting the UAE’s ambitious agenda to promote sustainable growth and development The world’s most innovative Islamic bank Sustainable Future Embed sustainability and ESG frameworks into our existing Islamic banking DNA Lifelong Partner for S
Slide 26: Delivering against our ESG strategy
Delivering against our ESG strategy Metric Description 2023 Target 2025 MSCI assesses the environmental, social responsibility and governance (ESG) MSCI A → Improve ratings risks of companies, and their ability to manage those risks relative to peers. ADIB has achieved an upgrade to its (ESG) risk s
Slide 27: Measuring success
Measuring success 2022/2023 Metric Description Target 2025 (baseline) NPS Net promoter score 55% → 65% Social SME financing Enable social inclusion through SME financing AED 897 Mn → 3 Bn (2030) Increase by 5% Financial literacy People impacted by financial awareness 5,400 → yearly Procurement Total
Slide 28: Measuring success
Measuring success Metric Description 2023 Target 2025 Sustainable finance portfolio Amount of finance allocated for green/ sustainable projects AED 6 Bn → AED 9 Bn Scope 1-2 emissions Direct environmental impact of our own operations 13,803 (TCO2e) → Reduce 20% Environment Green Auto → Green/sustain
Slide 29: Financial Performance
1 2 3 4 Financial Performance 5 1H 2023 Investor Presentation 6 7 8 29
Slide 30: Income Statement Highlights
Income Statement Highlights Strong YoY growth in revenues and profitability Profit After Zakat & Tax (AEDmn) Revenues (AEDmn) +50% 4,264 +61% 2,838 2,326 1H 22 1H 23 1,442 Expenses (AEDmn) +25% 1,446 1,160 1H 22 1H 23 1H 22 1H 23 Key Highlights Impairments (AEDmn) ▪ Solid macroeconomic environment,
Slide 31: Income Statement
Income Statement 61% YoY growth in 1H 2023 Net income underscored by strong funded and non-funded revenue growth Net Income (AEDmn) Net Income Movement YoY (AEDmn) 1,400 1,167 1,224 +61% 1,200 1,102 1,010 1,000 726 800 1,260 166 2,326 600 1,442 -286 400 -142 -114 200 0 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Slide 32: Funded Income
Funded Income Strong growth in funded income driven by strong business volumes and higher rates with NPM improving 128 bps Net Profit Margin (%) Net Profit Margin Movement YoY (%) 7% 6.14% 6.36% +128bps 6% 4.33% 0.45% 5% 4.35% 4.41% 0.94% 0.18% 0.98% 4.41% 3.47% 3.44% 3.41% 3.44% 3.73% 4% 3.23% 0.38
Slide 33: Non-Funded Income
Non-Funded Income Strong non-funded income growth on higher investment income, F&C and FX income, underlining strategic focus on revenue diversification Non-Funded Income (AEDmn) Non-Funded Income Movement YoY (AEDmn) +14% +32% 970 33 89 34 9 1,335 1,169 724 549 546 611 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Slide 34: Operating Expenses
Operating Expenses Cost to income ratio improved by 697bps to 33.9% on revenue growth Cost To Income Ratio (%) Expenses Movement YoY (AEDmn) +25% -697bps 40.9% 111 9 1,446 37.6% 34.9% 35.7% 166 33.9% 1,160 1H 22 9M 22 FY 22 1Q 23 1H 23 Expenses Employee costs General & Other Expenses 1H 22 administr
Slide 35: Impairments
Impairments COR is at comfortable 48bps in 1H 2023 Impairments Movement YoY (AEDmn) Impairments (AEDmn) +62% 51 24 369 +95% 58 33 416 227 -25 223 114 125 146 Impairments Retail Wholesale Private Treasury Others Impairments 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 1H 22 1H 23 +53% +73% -110% +1,018% +41% QoQ +1
Slide 36: Non-Performing Financing
Non-Performing Financing Healthy asset quality Metrix with NPA ratio at its lowest level since 2019 and coverage ratio improving NPA (AEDmn) NPA Movement YoY (AEDmn) NMC Group +5% +5% 85% NPA Coverage 804 8,619 8,705 8,710 8,175 8,175 8,597 8,619 1,273 1,273 1,273 1,273 1,273 -131 -85 -144 2Q 22 3Q
Slide 37: Balance Sheet
Balance Sheet Total assets increased by 28% YoY driven by 19% growth in customer financing Total Assets (AEDbn) Total Assets Movement YTD (AEDbn) 200 168.5 172.1 182.2 +8% 141.9 147.2 150 168.5 7.0 1.2 1.6 3.2 0.6 182.2 100 50 0 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 Total assets Cash & Due from Customer Inv
Slide 38: Customer Financing
Customer Financing AED 18 billion growth in financing assets vs last year mainly due to strong volume from Retail, Government and Public Sector Customer Financing, Net (AEDbn) Customer Financing, Customer Financing, Gross Movement YTD (AEDbn) 115.0 Gross by Segment (%) 107.7 109.3 110.0 107.3 105.0
Slide 39: Investments
Investments Diversified Investment Portfolio Investments (AEDbn) Total Investments Movement YTD (AEDbn) 25.0 22.6 19.4 21.0 +16% 18.6 19.1 20.0 15.0 2.8 0.4 22.6 19.4 10.0 5.0 0.0 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 Investments 4Q Investment in sukuk Investments Investments 22 at amortised cost at fair va
Slide 40: Customer Deposits
Customer Deposits Strong customer deposits with continued growth in CASA despite higher rates environment reflecting ADIB’s strong franchise Total Deposits (AEDbn) Total Deposits Movement by Segment YTD (AEDbn) 200.0 138.1 141.8 150.4 +9% 150.0 115.2 118.8 100.0 138.1 6.6 7.5 1.0 151.7 150.4 50.0 0.
Slide 41: Capital and Liquidity
Capital and Liquidity Robust capitalization and liquidity positions, well within regulatory requirements Capitalization Ratios (%) Liquidity Ratios (%) 85.1% 86.1% 20% 90% 82.1% 80.3% 78.0% 18.0% 17.9% 17.7% 17.2% 17.5% 18% 82.7% 70% 80.0% 78.0% 75.7% 72.7% 16% 16.9% 16.8% 16.5% 16.0% 16.4% 50% 14%
Slide 42: Segmental Performance
1 2 3 4 Segmental Performance 5 1H 2023 Investor Presentation 6 7 8 42
Slide 43: Segmental Balance Sheet Summary
Segmental Balance Sheet Summary Deposit growth led by growth in Retail, Wholesale segments Customer Financing, Gross Movement YTD (AEDbn) Customer Financing, Gross Composition (AEDbn) Other Associates and Subs. 2.1% 2.4bn +2% 6.7% 7.7bn 113.4 2.8 1.0 0.9 116.2 115.1 Retail Private 2Q 23 49.1% 3.8% -
Slide 44: Segmental Income Statement Summary
Segmental Income Statement Summary Profit growth driven by core business growth Total Operating Income Movement YoY (AEDmn) Total Operating Income Composition (AEDmn) Other +50% Associates and subs 6.7% 457 4,264 15.3% 285mn 131 49 162 654mn 751 1 2,838 Real Estate 0.8% Retail -124 33mn 1H 23 55.8%
Slide 45: Retail
Retail 95% Retail profit increase driven by growth in funded income Profit After Tax & Zakat Movement YoY (AEDmn) Cost Income Ratio (%) 55.5% 53.1% 51.1% 43.8% 41.6% +95% 709 41 1,293 1H 22 9M 22 FY 22 1Q 23 1H 23 662 -86 -33 Cost of Risk (%) 0.30% 0.34% 0.24% 0.23% Profit after tax & Funded income
Slide 46: Wholesale
Wholesale Wholesale net profit increased 28% YoY driven by higher funded income, decline in impairment charges and tax Profit After Tax & Zakat Movement YoY (AEDmn) Cost Income Ratio (%) +28% 28.4% 26.3% 26.5% 23.0% 22.5% 143 -2 -58 331 259 -12 1H 22 9M 22 FY 22 1Q 23 1H 23 -0 Cost of Risk (%) Profi
Slide 47: Treasury
Treasury 63% profit decline in the environment of rate hikes Profit After Tax & Zakat Movement YoY (AEDmn) Cost Income Ratio (%) 13.6% 12.2% 900 800 6.7% 6.6% 6.6% 700 -63% 600 500 279 -309 400 1H 22 9M 22 FY 22 1Q 23 1H 23 185 -2 -51 300 102 200 100 0 Investment Yield (%) (100) Profit after tax & F
Slide 48: Performance Track Record
1 2 3 4 Performance Track Record 5 6 1H 2023 Investor Presentation 7 8 48
Slide 49: Balance Sheet Trends
Balance Sheet Trends Steady balance sheet growth Total Assets (AEDbn) Customer Financing, Net (AEDbn) +10% CAGR +11% CAGR 168.5 107.7 125.2 126.0 127.8 136.9 78.7 81.1 83.4 88.3 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 YoY +1% +1% +7% +23% YoY +3% +3% +6% +22% Investments (AEDbn) Total Depo
Slide 50: Asset Quality, Capital & Liquidity
Asset Quality, Capital & Liquidity Improving capitalization and strong, stable liquidity position mitigate challenging credit quality NPA Ratio (%) NPA Coverage Ratio with Collaterals (%) 10.0% 8.9% 140.0% 132.6% 127.9% 8.8% 120.0% 9.0% 7.7% 120.0% 110.7% 8.0% 7.0% 100.0% 6.0% 6.5% 80.0% 5.0% 60.0%
Slide 51: Revenues and Expenses
Revenues and Expenses Decent revenue and operating expense trends Revenues (AEDmn) Net Profit Margin (%) 5.00% +6% CAGR 4.50% 4.42% 4.25% 4.00% 3.51% 3.50% 3.09% 3.56% 6,835 3.00% 5,769 5,915 5,358 5,560 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 YoY +3% -9
Slide 52: Impairments and Profitability
Impairments and Profitability Higher returns and reduction of cost of risk in 2022 Impairments (AEDmn) Cost of risk (%) 1.50% 1.28% +7% CAGR 0.99% 1.00% 1,314 0.65% 0.55% 954 0.58% 620 658 769 0.50% 0.00% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 YoY +6% +100% -27% -19% Profit After Zakat &
Slide 53: Appendix
1 2 3 4 Appendix 5 6 1H 2023 Investor Presentation 7 8 53
Slide 54: Additional Information
Additional Information Please contact the Investor Relations team for additional information or download ADIB's IR App ADIB Investor Relations Contact ADIB Investor Relations App Mrs. Lamia Khaled Hariz Head of Public Affairs and Investor Relations E: [email protected] T: +917 2 634 3000 M: +971
Slide 55: Disclaimer
Disclaimer The information contained herein has been prepared by Abu Dhabi Islamic Bank PJSC (ADIB). ADIB relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. This presentation has been prepared for information purposes only and is
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