Abu Dhabi Islamic Bank (ADIB) said its group net profit for 2011 surged 12.8 per cent to hit Dh1.16 billion ($316 million) compared to Dh1.02 billion the previous year.

Announcing the results, the Islamic bank said the group net revenue too registered solid growth with a 11.4 per cent jump in 2011 to hit Dh 3.42 billion compared to Dh3.07 billion the year before.

Despite difficult market conditions, largely as a result of the continued financial crisis, the performance from the main banking business was particularly strong as the bank’s net profit grew by 17.3 per cent to Dh1.42 billion from Dh1.21 billion in 2010, it added.

The ADIB board of directors are impressed with the results and have recommended an Dh0.2442 cash dividend per share, equivalent to 50 per cent of 2011 net profit, to the shareholders.

The Islamic bank said a strong year-on-year customer activity in the retail banking unit, which attained the number one ranking for customer service in the emirates in 2011, saw its customer numbers jump by 6.3 per cent to more than 452,000, coinciding with the opening of the bank's 69th branch in the UAE.

Despite the growth in customer numbers and a more diversified product offering, the impact of the UAE Central Bank guidelines on personal banking fee income and asset growth was noticeable and ADIB said it expects subdued growth, on the back of further regulation, to continue into 2012.

ADIB said its total credit provisions and impairments for 2011 reached Dh821.1 million an increase of 9.6 per cent compred to the year before.

Commenting on the results, CEO Tirad Mahmoud said: “The environment in which we operate remains challenging as the global financial crisis continues and uncertainty resulting from the malaise in Europe preoccupies decision makers and regulators around the world.'

'As a result, while 2011 and the start of 2012 has witnessed a welcome joint focus by the government, regulators and banks on easing the burden faced by those debtors in the UAE whose circumstances and ability to meet their obligations are most onerous, we continue to anticipate a subdued growth in profits while the crises continues,' he stated.

The bank's total non-performing assets increased by 9.4 per cent in 2011, but in an encouraging sign they declined by 16 per cent in the fourth quarter of 2011, the official said.

Despite this, ADIB’s management continues to take decisive action in accounting for non-performing credit exposures and investments, he added.
 
According to him, ADIB has maintained its strong liquidity position, as the advances to stable funds ratio was 83.4 per cent at the end of December 31, 2011.

'We continue to proactively control the cost of funds by careful management of our retail and wholesale funding books and as a result our current and savings accounts have increased significantly above market growth rates,' he added.

The bank's liquidity was further enhanced with a successful issue of a five-year $500 million sukuk, the Islamic bank said.

ADIB also maintained its conservative approach to non-performing asset recognition and provisioning in line with both best practice and UAE Central Bank guidelines, ensuring a healthy pre-collateral non-performing asset coverage ratio of 66.8 per cent, as well as continuing the quarterly impairment review of the portfolio held by the real estate subsidiary, Burooj Properties.

On the outlook for 2012, Tirad said, 'Our view of the economic outlook has not changed; we do not expect this period of uncertainty to end soon and we remain concerned about global growth rates and the impact on our markets.'

'The changes in the consumer credit environment and welcome announcement of the establishment of a credit bureau in the UAE means that 2012 will see banks having to adjust their business models to the new reality of consumer austerity and responsibility,' he added.-TradeArabia News Service