Abu Dhabi Islamic Bank - Egypt
Precautionary provision build-up negatively impact profitability despite high NII growth
Egypt/ Banks/ Q1 2020 results
Net profits decreased on the back of provision build-up:
ADIB’s consolidated net profit before minority interest decreased by 17.4% to EGP230mn in Q1 2020, given a significant increase in impairment of credit losses by EGP81mn, implying a higher cost of risk (CoR) ratio of 1.4% in Q1 2020 vs. 0.6% a year earlier. NII rose 15.3% y/y, but NIM softened to 5.2% in Q1 2020 down from 6.4% a year earlier despite 1.7% lower cost of funding (CoF). Meanwhile, ROAE fell to 22.2% in Q1 2020, down from 37.2% a year earlier, due to a higher effective tax rate and lower financial leverage in tandem with higher CoR magnified by higher net lending exposure.
Shihab M. Helmy
Equity Analyst
Tel.: +202 3300 5723