u Dhabi, 29 July 2009 - Abu Dhabi Islamic Bank Abu Dhabi Islamic Bank ( ADIB ADIB ), a leading regional Islamic financial services group today announced its results for the first half of 2009. Revenues for the first half at AED 1,178.3 million rose by 7.1% compared to first half of 2008 despite the decline in real estate revenues of AED 156.2 million and also grew 3.5% compared to Q1 09.
Putting the significance of these results in perspective, Tirad Mahmoud, CEO, said: "Despite the major Credit Loss Provisions (AED 171.4 million) that were taken in Q2, 2009 and the major decrease in real estate Investment Income (AED 147.7 million); our profitability has remained strong in the second quarter. The strong performance of our banking activities provided a 32% increase in net profit versus the first half of last year and a 49% increase over the second quarter of 2008."
In keeping with ADIB ADIB 's prudent practice, provisions at the bank continue to grow. During Q2 2009 the bank took additional credit loss provisions of AED 171.4 million and total provisions now stand at AED 836 million versus AED 589.3 million on 31 December 2008. Provisions now cover 2.2% of the Gross Customer Financing portfolio.
Explaining the reason for increasing credit loss provisions, Tirad said: "The credit environment remains weak and we expect the rest of this year to remain challenging with further provisioning necessary. In early 2008 we started to build our provisions given our then view of the deepening economic downturn. While there are now some signs of recovery we will continue with our conservative approach. We are actively engaged with our clients who have been impacted by the current economic conditions and are working with them to develop solutions that will enable them to meet their commitments. Notwithstanding this, ADIB ADIB will maintain the prudent policy to take proactive provisions against the credit risk portfolio as circumstances require over the second half of the year."
GROUP COMPANIES
Commenting on the performance of other Group companies besides the core bank business, Tirad said:
Burooj Burooj / Real Estate Investment: Burooj Burooj , has been negatively influenced by market conditions and prudent measures are being adopted as reflected by Burooj Burooj posting a net loss of only AED 14.4 million during the first half of this year. This stands in contrast with the profit of AED 141.8 million Burooj Burooj posted in the first half of 2008 and reflects the prevailing challenges in the real estate sector. While the sector remains under pressure, Abu Dhabi is resilient and the future is starting to look promising. We expect Burooj Burooj to start making a positive contribution to our results before the end of the year and maintain the momentum going into 2010.
ADIFS Turning to ADIB ADIB 's brokerage subsidiary, we are pleased to see that Abu Dhabi Islamic Financial Services has returned to profitability with net profit of AED 6.1 million in the second quarter of 2009 versus a loss in first quarter of this year. ADIFS is now the 8th largest share brokerage house, by market share, in the UAE and we expect it to consolidate its position in the next six months, despite low market volumes.
Outlook Providing guidance on the bank's direction for the rest of this year, Tirad said: " ADIB ADIB 's strategy is sound and is inspired by the principles of Shari'a in maintaining customer and shareholder trust. We see ourselves as integral to the UAE's economic future and are thankful for the support we receive from the government, shareholders, customers, the community and staff. We are committed to expanding our branches and ATM network by the end of the year and are on track. Our wealth management business is expected to come on stream later this year providing real support to our young Private Banking franchise. We also expect to see a pick-up in our Business Banking and Corporate Banking units. Continued growth in core business activities, robust liquidity and a well capitalized balance sheet are some key positives we aim to build on."
ADIB ADIB Financials summary - First Half 2009 vs First Half 2008
Banking
Consolidated Group
Financials
First Half 2009
First Half 2008
Change
First Half 2009
First Half 2008
Change
AED Mn
AED Mn
%
AED Mn
AED Mn
%
Source: AJP
