Question

Question 1                                                                                                                                

Describe the Islamic bank you have selected to study: The name, size (e.g. Market capitalization, % of the GDP), major Islamic banks operating in the country, the extent of competition, key current trends, and relevant macroeconomic that are affecting the industry, the outlook of the industry. (ADIB / Abu Dhabi Islamic Bank)

1. Explicitly describe what each ratio means in the context of the companies that you are analyzing.

2. Identify the company that is stronger on each particular measure.

3. Discuss your interpretation of the comparison and its implications. Size (Total Assets, Total Sales)

4. Finally, if you had AED10,000 to invest in one of the companies you have analyzed, which would be the better investment and why?

• Age (Number of years in operation)
• Liquidity Ratio (Current Assets/Current Liabilities), Cash Holdings (Cash/Assets)
• Leverage Ratio (Total Debt/Total Assets, Long-term Debt / Total Assets, Short-term
• Debt/Total Assets, Total Debt / Equity)
• Return on Equity (ROE), Return on Assets (ROA)
• Price-Earnings Ratio (P/E)
• Year-end stock prices for the last five years

Answer 1

Abu Dhabi Islamic Bank

ADIB commenced its operations with a paid-up capital of one billion dirhams divided into one hundred million shares, the value of each share being ten dirhams. The shares are quoted on the Abu Dhabi Securities Market.

ADIB is a leading Islamic bank with more than AED 124.6 billion in assets. Established in 1997, the bank provides world-class, Shari'a-compliant retail, corporate, business, private banking and wealth management solutions through award-winning digital channels and across an extensive branch network. The bank has a presence in six strategic markets, including Egypt, where it has 70 branches, the Kingdom of Saudi Arabia, the United Kingdom, Sudan, and Iraq. Its shares trade on the Abu Dhabi Stock Exchange (ADX). ADIB has more than 2,000 employees and remains one of the leading banks in the recruitment, development, and promotion of local talent across all of its geographies. The bank has one of the highest Emiratization ratios and approximately 36 percent of the bank’s workforce are UAE nationals. Named ‘World’s Best Islamic Bank’ by the Financial Times’ The Banker publication, ADIB has a rich track record of innovation based on a desire to always improve its customers’ banking experience. Amongst other benefits, the bank’s recent digital transformation program has led to the creation of a new generation of the technology-enhanced branch, ADIB Express, which combines the benefits of digital banking with highly-personalised customer service, and Express Finance, providing qualifying customers with instant access to personal finance through the mobile app.

size    : AED 124.6 billion.

ADIB is a leading Islamic bank with more than AED 124.6 billion in assets

Industries :Banking

Company size : 1001-5000 employees

Headquarters :Abu Dhabi, Abu Dhabi

Type :Public Company

Founded :1997

Specialties : Islamic Banking, Personal Banking, Business Banking, Wholesale Banking, Covered Cards, Wealth Management, Financing Solutions, Liabilities Settlement, Accounts, Busines Deposits, Finance, Banking, Investments, trade, Economy

CURRENT PRICE :ADIB:UH 3.7 2AED

3 )Financial Highlights AED 126 .0 AED 19.1 (billion) Total Assets (billion) Total Equity AED 101.4 80.0% (billion) Total Customer Deposits (billion) Customer Financing to Deposit Ratio 2,601 5,915 (million) Net Profit (million) Total Revenues Net Profit for 2019 increased by 4.0% to AED 2,601 million Total Revenues for 2019 increased by 2.5% to AED 5,915 million ADIB Group 2019 AED mn 2018 AED mn 2017 AED mn 2016 AED mn 2015 AED mn Net revenue from funding Fees, Commissions and Foreign Exchange Income Investment and Other Revenues 3,818.3 1,400.8 696.1 3,906.7 1,315.7 547.1 3,769.6 1,300.6 562.1 3,921.0 979.6 484.9 3,771.3 965.0 398.1 Total Revenues 5,915.2 5,769.5 5,632.3 5,385.5 5,134.4 Operating Profit (Margin) Credit Provisions and Impairment Charge 3,262.2 658.1 3,125.7 620.1 3,123.1 790.4 2,937.6 970.0 2,760.3 820.0 Net Profit after zakat & tax 2,601.1 2,500.8 2,300.1 1,953.6 1,934.0 126.0 81.1 101.4 125.2 78.7 100.4 123.3 76.5 100.0 122.3 78.2 98.8 118.4 78.4 94.9 79.98% **18.88% 44.85% 78.36% 17.18% 45.82% 76.53% 16.09% 44.55% 79.15% *15.25% 45.45% 82.59% *15.14% 46.24% Summary Income Statement Summary Balance Sheet Total Assets in AED (billion) Customer Financing in AED (billion) Customer Deposits in AED (billion) Financial Ratios Customer Financing to Deposit Ratio Risk asset ratio - Total (CAR, %) - Basel III / Basel II Cost Efficiency Ratio * As per Basel II ** without dividend adjustment for 2019 6 ADIB Annual Report 2019

% Growth in Net Profit Growth in Net Profit reached AED 2,601.1 million