Abu Dhabi Islamic Bank (ADIB) on Thursday reported a 68% year-on-year (YoY) rise in the second quarter net profit to 1.22 billion dirhams ($333.24 million) on solid revenue growth and strong deposit inflows, but warned of pressures of a rising rate environment.

Net revenue grew by 71% YoY to AED 1.50 billion for the three-month period ending June 30, 2023.

Total operating income rose 56% to AED 2.23 billion in the second quarter compared to AED 1.43 billion in the year-earlier period.

However, provision for impairment increased to AED 223 million, up 95% YoY.

The bank’s liquidity position was healthy and comfortably within regulatory requirements, with the advances to stable funding ratio at 78% and the eligible liquid asset ratio at 21.8%, the biggest Islamic bank in the emirate said in a statement on ADX.

Nasser Abdulla Al Awadhi, Group Chief Executive Officer, however warned that global economic uncertainties remain, and that there are concerns about the pressures of a rising rate environment on major segments of the UAE economy.

"We will therefore maintain our conservative approach to balancing the risk and reward of new credit extension while simultaneously building our capital.”

The Shariah-compliant bank’s net profit increased 61% to AED 2.3 billion in the first half of 2023 from AED 1.4 billion a year ago.

Customer deposits rose 31% YoY to AED 150 billion in the first half of 2023, while total assets gained 28% YoY to AED 182 billion.

(Editing by Brinda Darasha; brinda.darasha@lseg.com)