ADCB 2009Q4 loss AED1.2bn

[sharewadi]

Abu Dhabi Commercial Bank (ADCB) press release this afternoon announced 2009 FY loss of AED 513m, and 2009 Q4 loss of AED 1,212 million. ADCB have taken an impairment allowance of AED 2.05 billion in Q4 and AED 3.75 billion for the full year 2009. Operating income was AED 1.2 bn for Q4 and AED 4.8 bn for FY 2009.

A happy surprise to see such a comprehensive press release from a UAE company - includes summary results and a few charts and graphs. Also good to see Q4 figures included - rarely seen in either press releases or financial statements for UAE companies. Press release in next post but graphs and tables not so easy to include - ADX website tomorrow morning should have download, and maybe complete financial statements also (not included with press release).

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[sharewadi]

Press Release 26 January 2010:

ADCB reports full year and fourth quarter results Abu Dhabi – ADCB (ADCB) today reported its results for the year ended 31 December, 2009 subject to approval by the UAE Central Bank. Commenting on the Bank’s performance, Eissa Al Suwaidi, Chairman of ADCB said “The Bank has a great franchise and has achieved record top line revenue growth in 2009. This has been a difficult year and net profitability has been impacted as a result of the current economic crisis and additional provisioning requirements. The decision to take record provisions have resulted in the bottom line of the Bank to go into negative territory. The Bank has recorded a number of achievements this year that I am proud of, notably being awarded the Hawkamah award for Corporate Governance, Sheikh Khalifa Excellence Award (Silver) for customer service and a chosen partner with Oxford and Cambridge Universities as one of the top 100 global employers of choice. I have full confidence in our newly established management team to drive the Bank through these turbulent times and deliver an outstanding performance which is already evident from our solid growth in our core operations. We have the full support of our principal shareholder, the Abu Dhabi Investment Council. We remain optimistic about the long term growth potential of the UAE and are well placed to benefit as the economy rebounds. I wish to extend our most sincere appreciation and gratitude to the leadership of the UAE particularly to His Highness Sheikh Khalifa Bin Zayed Al Nahyan, the UAE President and Ruler of Abu Dhabi, to His Highness Sheikh Mohamed Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, to the UAE Central Bank, to His Highness Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs for their continued support for ADCB and the banking sector. Ala’a Eraiqat, Chief Executive Officer and a member of the Board, commented on the results: “Year 2009 was a critical year for Abu Dhabi Commercial Bank (ADCB). With the Bank’s new management team and direction of the Board, we have succeeded in growing the core business of the Bank to record levels and improving all important ratios. These improvements give ADCB a solid platform for the future. We have taken AED 3.86 bn in impairment provisions (2008 - AED 1.67 bn) which amounts to 3.1% of the loan and investment book. Such significant provisions have brought our bottom line results to a net loss of AED 513 mn for 2009. Our net interest income grew by 32% and operating income witnessed strong growth of 9% Focused and disciplined approach to cost ensured they were held flat to prior year and our cost to income ratio dropped to 32% in 2009 from 35% in 2008. Our biggest achievement was the growth of customer deposits by 11% outgrowing the loans and advances growth of 7% during the year. Our capital position was significantly enhanced which currently stands at 17.2% (2008 - 11.4%) well above the regulatory minimum of 11%. Liquidity was another success, we ended the year with a solid liquidity position, with our advances to stable resources ratio at 91%. Our local franchise has proven to be strong. Total provisions on our international legacy exposure, primarily lending outside the UAE and structured investment portfolio in US/Europe, totaled AED 2.1 bn. Our key local businesses of Retail, Wealth Management, SME, and Corporate Banking activities are amongst the most efficient and respected operations locally and regionally; the Bank was awarded the Sheikh Khalifa Excellency Award for 2009 and managed to efficiently service more than 345,000 active customers through only 49 branches. Our new businesses launched in 2009 have seen strong results: Islamic Banking after a year of operation is our fastest growing segment under the Meethaq brand, now contributing AED 7.26 bn of customer deposits and AED 1.53 bn of customer loans and provides our customers with full range of Shariah compliant solutions. In its first year of operations in 2009, Investment Banking made a significant contribution of AED 35 bn via a leading role in structuring, book-running and advising public transactions including bonds, sukuks and loans. The Bank successfully repaid AED 7 bn of MTNs and maturing obligations in 2009 and successfully raised AED 3.67 bn of 5 years notes and AED 1.4 bn in shorter dated bonds, making us the first and only bank in GCC that has qualified to issue under a global MTN program. We maintain our focus on commitment to society by training and attracting and developing UAE nationals. As of December, 2009 our UAE national staff count reached 35% of total staff headcount. In light of both the global macro economic conditions and the local operating environment during 2009, the Bank has chosen to adopt prudent practices to its renewed medium term strategy; thus focusing on a UAE centric approach to growth, operational efficiency, stable funding and world class risk management. We believe that this coupled with our strong core earnings and our talent provides ADCB a solid platform for value creation for the future. On behalf of the Board of Directors and the Executive Management Team, I would like to express our sincere appreciation and gratitude to our shareholders for their support and our customers for their trust. As we enter 2010, we are well capitalised with a clear strategy. With the commitment and loyalty of our people, we have created a strong foundation for the future and we are positioned for long-term success.”

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[yusufbg52]

Press Release 26 January 2010:

We have taken AED 3.86 bn in impairment provisions (2008 - AED 1.67 bn) which amounts to 3.1% of the loan and investment book. Such significant provisions have brought our bottom line results to a net loss of AED 513 mn for 2009.

The major reason is expected due to 2.24 billion dirhams exposure against Saudi Arabia’s Saad and Algosaibi groups, Where in CB of UAE had instructed the banks to create 50% provisioning against these grps. which could be 1.12 BN AED for ADCB in the 4th qrter out of the total provision of AED 1.8 billion created by the bank in the fourth-quarter.

So We can still see further provisioning against the remaining exposure of ADCB against Saad and Algosaibi Grp in next yr. Indicating 2010 yr also to be not so positive for ADCB.

thanks

[sam111sam]

I think ADCB CEO recently mentioned that total exposure to the Saudi group is only Dhs 900m

It was very interesting to see that once huge losses were announced, the share price actually went up in a declining market

Seems the results did not surprise some investors !

[sam111sam]

[Suhail]

[moor]

[sam111sam]

[Suhail]

[dabbler1]

I took a gander at this bank's financial statements from end September 2009.
Wow does it make for some really ugly reading.
You don't need to be Moody's to downgrade this bank a few notches
The ex-CEO may have been wanted by Interpol for some weird crimes, it was rumoured last year but I think his biggest crime was borrowing So Much Money in So Many Currencies.
He even borrowed money for ADCB in Slovak whatever it is called currency...
The sad state of this bank is reflected in the coupons (interest rates) they are paying on whatever they borrowed, as well as the currencies they borrowed in becoming much stronger against the Dirham.
Now, in very basic terms, a bank has its regular liabilities, what it borrows from ordinary customers like you and me and companies, and the government, and it has got the "borrowings" from the international markets.
On the other side of the balance sheet, the bank would have so-called assets.
Some of these assets you all have discussed like Al Gosaibi. Well from where I stand, Al Gosaibi borrowings from ADCB are peanuts compared to what ADCB has borrowed from the rest of the world.
Why did they borrow so much money?
To buy which country?
Stay away from this bank like the plague! I don't care how much good business they do for the next 5 years in the UAE, and if they fire 50% of their staff to reduce expenses, but unless this bank has some extraordinary plan to rule the middle East, it is going nowhere in their financial statements. This country cannot support a revenue stream that can support the debt this bank is in.
The funny thing is they will probably announce dividends soon.

Market cap 7.5 billion dirhams today.

Sounds extremely overvalued!

This is a bank that will be a zombie bank, meaning supported by Abu Dhabi and the Central Bank for several years.
I expect a takeover by NBAD in the next two years.
Or Aabar! They buy everything and anything.
No one knows why!

[sharewadi]

[sharewadi]

[dabbler1]

I am somewhat sure that ADCB paid off their Euro liabilities in 2009.
As of December 31, 2008, a little over a year ago, they had the following maturing within a year.
Euro unsecured notes 256.4 million dirhams worth.
and Euro syndicated loans of 820.4 million dirhams worth

Of course, the Euro was at an alltime high in summer 2008, but its average throughout 2009 was much higher than on December 31, 2008, so the dirham amounts paid down were likely higher.
All this information as per September 2009 statements.

But it's amazing how a small UAE bank raised money in all these currencies (Turkish Lira, Singapore Dollar, Australian Dollar, and more) and was in such a rush to raise debt...

[Suhail]