Abu Dhabi Commercial Bank (ADCB) has received an upgrade in its long-term issuer credit rating, moving from ‘A’ to ‘A+’ with a ‘stable’ outlook by S&P Global Ratings. The upgrade reflects the bank’s robust financial standing and high asset quality, marking a significant milestone in its growth trajectory.
With this rating upgrade, ADCB is now among the top three highest-rated banks in the MENA (Middle East and North Africa) region by S&P Global. This recognition underscores the bank’s financial stability and the positive outlook for its future performance.
S&P Global Ratings highlighted ADCB’s sound earnings generation and high capital retention as key factors underpinning the bank’s strengthened capitalization. In a recent research update, S&P noted that these elements continue to be a driving force behind the bank’s performance.
The rating agency emphasized that ADCB’s capital position remains a “key rating strength,” which will continue to support the bank’s ability to navigate the economic cycles in the region. Furthermore, S&P acknowledged that the improvements in ADCB’s risk management culture and control framework over the past four years are expected to further bolster its asset quality.
“We believe the Bank’s asset quality will continue to benefit from the strengthening of its risk management culture and control framework,” S&P added, stressing that the bank’s more cautious risk appetite positions it well for future challenges.
Strategic Ambitions and Growth Prospects
ADCB’s solid financial standing comes at a time when the bank is accelerating its growth strategy. The bank aims to double its net profit to AED 20 billion within five years, signaling its commitment to achieving sustainable growth.
The rating upgrade provides ADCB with favorable cost of capital, a key advantage as it implements its new strategy to maintain its growth momentum. The bank’s strong market position, combined with its prudent risk management practices, positions it well to meet its ambitious targets.
Since launching its new strategy in 2020, ADCB has made significant strides in terms of profitability and scale. The bank’s profit before tax has grown at a compound annual growth rate (CAGR) of 28%, surpassing AED 10 billion in 2024, a year ahead of target.
ADCB’s market position has been further strengthened by impressive balance sheet expansion. Assets have increased by 59% since the end of 2020, surpassing AED 650 billion in 2024. The bank’s net loans have grown at a 10% CAGR, while its strategic rebalancing of the loan book has resulted in an increase in exposure to government-related entities (GREs), which now make up 27% of gross loans, up from 21% in 2020.
Growth in Deposits and Strategic Positioning
Alongside the expansion of its loan book, ADCB has also attracted significant deposit inflows, growing at a CAGR of 14% since 2020. This growth in deposits further strengthens the bank’s financial position and supports its continued growth in the UAE market.
The bank’s strong franchise and solid market reputation have been crucial in driving this growth, allowing ADCB to expand its footprint while maintaining a strong focus on risk management and prudent lending practices.
With its strong financial position, strategic growth initiatives, and improved risk management practices, ADCB is well-positioned to navigate economic cycles and continue its upward trajectory. The bank’s improved credit rating reflects the market’s confidence in its ability to deliver sustainable growth while maintaining financial stability.
As ADCB continues to expand its market share and work towards its ambitious profit goals, its rating upgrade from S&P Global Ratings marks an important step in securing a successful future for the bank and its stakeholders.
