The bank posted a net profit of 3.81 billion dirhams ($1.04 billion) for the year ending Dec. 31, down from a net profit of 5.24 billion dirhams a year earlier.
It beat analysts’ mean net profit estimate of 3.46 billion dirhams, according to Refinitiv data.
Its fourth quarter net profit fell 4% year-on-year to 1.01 billion dirhams. It was down 26% compared to the third quarter.
“Net impairment charges were AED 3.993 billion in FY’20, significantly higher than in the prior year, to reflect the challenging macro-economic environment and due to provisions taken on NMC Health Group, Finablr and associated companies,” ADCB said in a statement.
With exposure of about $981 million, ADCB was a major lender to NMC Health, which went into administration last year after months of turmoil following questions over its financial reporting and the discovery of undisclosed debt.
ADCB also had an exposure of $182 million to payments group Finablr, whose majority shareholder, Indian businessman BR Shetty, founded NMC.
In 2020, ADCB booked 1.656 billion dirhams in provisions on NMC Health, Finablr and associated companies, nearly two-fifths of its total exposure to NMC and Finablr.
“The Bank is comfortable with provisioning levels on NMC Health Group given the positive developments in the company’s recent financial performance and its ongoing restructuring process,” ADCB said.
Last year, ADCB was among a group of lenders providing a $325 million facility to fund its administration and pave the way for restructuring, which it said has placed it “in a strong position to maximise recoveries.”
Its non-performing loans ratio, including purchased and originated credit-impaired (POCI) loans, rose to 7.7% in 2020 from 4.53% in 2019.
ADCB’s cost of risk – excluding impairment charges on NMC and Finablr – rose to 1.45% in 2020 from 0.8% in 2019.