Abu Dhabi Commercial Bank : 2023 2023 Annual Report

ABU DHABI COMMERCIAL BANK PJSC 2023 ANNUAL REPORT

DRIVEN BY

PEOPLE.

DESIGNED FOR THE FUTURE.

Cover: Aysha Al Hallami, Board Member and Chair of the Board Audit Committee

2023 ADCB Annual Report

DRIVEN BY PEOPLE. DESIGNED FOR THE FUTURE.

Table of contents

Scope of reporting

The data presented in this report covers Abu Dhabi Commercial Bank PJSC (referred to as 'ADCB Group'), all its subsidiaries and branches within and outside of the UAE, unless stated otherwise.

The entities covered include the following:

• Abu Dhabi Commercial Bank, UAE (ADCB UAE)
• Al Hilal Bank PJSC, UAE (AHB UAE)
• Al Hilal Bank, Kazakhstan (AHB Kazakhstan)
• Abu Dhabi Commercial Bank - Egypt SAE (ADCB Egypt)
• ADCB Securities LLC (ADCB Securities)
• ADCB Asset Management Limited (ADCB Asset Management)
• ITMAM Services LLC and ITMAM Services FZ LLC (ITMAM)
• Abu Dhabi Commercial Properties LLC (ADCP)
• Abu Dhabi Commercial Engineering Services LLC (ADCE)

The UAE's vibrant socio-economic
landscape	6
ADCB overview
ADCB at a glance	12
Creating stakeholder value	18
Awards and recognition	20
Driven by people
Designed for the future	22
Strategic review
Chairman's message	38
Economic overview	40
Group CEO's message	42
Group strategy	46
Group CFO's message	48
Financial review	52
Sustainability
Introduction	62
Our climate framework	65
ADCB joins UN Net Zero Banking Alliance	69
Our climate journey	70
Strategy, governance and other enablers	72
ADCB's sustainability strategy	74
Best practice ESG governance	76
Other ESG strategic enablers	78

Business review

Retail Banking Group	84
Corporate & Investment Banking Group	90
Private Banking & Wealth Management Group	98
Treasury & Investments Group	102
Property Management	104
Al Hilal Bank	106
ADCB Egypt	110
Other subsidiaries	114

Strategic priorities

Our people	118
Emiratisation	122
Delivering a digital future	130
Driving service excellence	136

Risk management

Risk review	144
Compliance	158

Governance

Corporate Governance Report

166

Financials

Financial statements

272

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HIS HIGHNESS SHEIKH MOHAMED BIN ZAYED AL NAHYAN

PRESIDENT OF THE UNITED ARAB EMIRATES AND RULER OF ABU DHABI

SUPREME COMMANDER OF THE UAE ARMED FORCES

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HIS HIGHNESS SHEIKH MANSOUR BIN ZAYED AL NAHYAN	HIS HIGHNESS SHEIKH KHALED BIN MOHAMED BIN ZAYED AL NAHYAN
UAE VICE PRESIDENT	CROWN PRINCE OF ABU DHABI
DEPUTY PRIME MINISTER AND CHAIRMAN OF THE PRESIDENTIAL COURT	CHAIRMAN OF THE ABU DHABI EXECUTIVE COUNCIL

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The UAE's vibrant socio-economic landscape

The UAE is driving rapid transformation, focused on diversification and the transition to an inclusive, net zero economy. The country's leadership is guiding a number of strategic initiatives to develop a world-class business, investment and lifestyle destination, creating a vibrant socio-economic landscape that provides significant opportunity.

2023 ADCB Annual Report		DRIVEN BY PEOPLE. DESIGNED FOR THE FUTURE.

Promoting sustainability

ABU DHABI SUSTAINABILITY WEEK

Abu Dhabi Sustainability Week, a UAE-led global initiative, promotes sustainable development and environmental action. Launched by H.H. Sheikh Mohamed Bin Zayed Al Nahyan, President

of the UAE and Ruler of Abu Dhabi, the event was presided over by H.H. Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and H.E. Dr. Sultan Al Jaber, the COP28 President.

Advancing the energy transition

BARAKAH NUCLEAR ENERGY PROJECT

The Emirates Nuclear Energy Corporation's flagship Barakah Nuclear Energy Plant, located in the Emirate of Abu Dhabi, is scheduled for full four-unit operations in 2024. The plant will generate 25% of the UAE's electricity needs for the next 60 years, while preventing the equivalent of 22.4 million tons of carbon emissions annually.

Shaping a global financial centre

ABU DHABI FINANCE WEEK

Abu Dhabi Finance Week has become a key event as Abu Dhabi continues to grow as a major global finance and business hub. In 2023, H.H. Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, inaugurated the event, which was focused on sustainable investment.

Leadership on climate

THE COP28 GLOBAL CLIMATE SUMMIT In November 2023, the UAE hosted the global climate summit, COP28, reflecting the nation's growing commitment to collaborative climate action. The conference was attended by H.H. Sheikh Mohamed Bin Zayed Al Nahyan, President of the UAE and Ruler of Abu Dhabi, H.H. Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, H.H. Sheikh Mansour Bin Zayed Al Nahyan, Vice President and Deputy Prime Minister of the UAE, and H.H. Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi.

Nurturing Emirati talent

LAUNCH OF MAWAHEB TALENT HUB

1. Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, launched the Mawaheb Talent Hub, aiming to equip Emiratis with capabilities and experiences tailored to the evolving requirements of the high skilled job market.

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Building world-class infrastructure

ETIHAD RAIL LAUNCH

Etihad Rail network was officially inaugurated in 2023 by

1. Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. The network of 900 km of track across the Emirates supports the country's sustainable development goals through the targeted reduction of carbon emissions in the road transport sector by 21% by 2050.

Leading on innovation and exploration

H.E. DR. SULTAN AL NEYADI COMPLETES SPACE MISSION

Emirati astronaut H.E. Dr. Sultan Al Neyadi returned from the longest Arab space mission on the International Space Station in 2023 - a significant milestone in the UAE's National Space Strategy. H.E. Dr. Sultan Al Neyadi was congratulated upon his return by H.H. Sheikh Mohamed Bin Zayed Al Nahyan, President of the UAE and Ruler of Abu Dhabi, and H.H. Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

Promoting Emiratisation in the private sector

THE NAFIS INITIATIVE

The UAE adopted a new law in 2023 requiring private companies with 20-49 employees to hire at least one Emirati national by 2024 and at least two by 2025, with larger companies required to achieve 2% annual Emiratisation growth. The Emirati Talent Competitiveness Council (NAFIS) is a Federal programme launched to support this initiative. The NAFIS Award Ceremony was attended by H.H. Sheikh Mohamed Bin Zayed

Al Nahyan, President of the UAE and Ruler of Abu Dhabi, and H.H. Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

2023 ADCB Annual Report

Creating a lifestyle destination

ABU DHABI GRAND PRIX

Abu Dhabi hosted the final race of the Formula One season in November, marking the 15th anniversary of the Etihad Airways Abu Dhabi Formula One Grand Prix. The event was presided over by H.H. Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and

1. Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai. H.E. Khaldoon Khalifa Al Mubarak, Managing Director and Group CEO of Mubadala Investment Company was also in attendance.

An international aviation hub

OPENING OF THE ZAYED INTERNATIONAL AIRPORT, ABU DHABI

Zayed International Airport in Abu Dhabi was opened in November 2023 to support the Emirate's growing stature as a major aviation hub. The terminal is the first in the world to include all nine biometric touchpoints, making the passenger experience seamless and convenient.

DRIVEN BY PEOPLE. DESIGNED FOR THE FUTURE.

Investing in technology

LAUNCH OF AI71

1. Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, launched AI71, an AI company that is leveraging proprietary generative AI models developed by the Technology Innovation Institute, a global centre that is part of Abu Dhabi's Advanced Technology Research Council. The initiative supports Abu Dhabi's strategy to become a global hub for AI.

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ADCB at a glance

Creating stakeholder value

Awards and recognition

ADCB OVERVIEW

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ADCB AT A GLANCE

A leading UAE bank with a growing market share

ADCB is a major UAE financial institution, playing a central role in supporting the country's progressive agenda for sustainable economic growth. The Bank provides a diverse range of products and services to corporate and individual customers, delivering service excellence and a seamless digital experience.

2023 ADCB Annual Report

DRIVEN BY PEOPLE. DESIGNED FOR THE FUTURE.

Ownership structure

Diverse workforce with Emiratisation as a key strategic priority

2,096		AED
Emiratis employed	567 bn
80+		Third largest bank by total assets in the UAE
Nationalities

Service excellence driving

16.2%

Market share - loans(2)

14.4%

Market share - deposits(2)

96%

Mubadala Investment Company: 60.20%

Free float domestic investors: 21.64%

Free float foreign investors: 18.16%

Contribution to operating income by business segments

customer growth

1.9 mn+

ADCB retail customers(1)
(# mn)				1.93
			1.49
	1.14	1.28
0.95
2019	2020	2021	2022	2023

Operating income derived from the UAE

Retail

Banking

AED 4.7 bn

28%

AED

16.9 bn

Treasury and

Investments

AED 4.5 bn

27%

Corporate and Investment Banking AED 5.9 bn

35%

Private

Banking

AED 1.3 bn

8%

Property

Management

AED 0.4 bn

2%

		73		89%
Bankwide net promoter score(1)		Customers registered on
				Internet & Mobile Banking(1)

(1) ADCB UAE only

Geographic footprint

48

ADCB branches in the UAE

8		3	50
Al Hilal branches in the UAE	Al Hilal branches in Kazakhstan		ADCB Egypt branches

(2) Based on ADCB's year-end financials and the latest data available from the UAE Central Bank as at 30 November 2023

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ADCB AT A GLANCE

creating long-term value for shareholders

Growing franchise strength

			CAGR: +12%		CAGR: +25%
						8.2
5.2		5.2	6.4
3.8
2019	2020	2021	2022	2023

Net loans and advances and customer deposits (AED bn)

Net loans CAGR +5%, deposits CAGR +8%

248	262	239	251	244	265	258	309	302	363

2019	2020	2021	2022	2023
Net loans	Customer deposits

CET1 and capital adequacy ratio (%)

15.48%	16.61%	15.97%	15.77%	16.22%
12.11%	13.30%	12.94%	12.96%	12.86%
2019	2020	2021	2022	2023
Capital adequacy ratio	CET1

Credit ratings

A/A-1/Stable	A+/F1/Stable

2023 ADCB Annual Report

DRIVEN BY PEOPLE. DESIGNED FOR THE FUTURE.

Long-term shareholder value creation

Dividend per share (AED)			0.55	0.56
0.38		0.37	0.18	cash
		0.27
				0.37	stock
2019	2020	2021	2022	2023

Basic earnings per share (AED)

				1.07
			0.86(1)
0.70		0.73
	0.51
2019	2020	2021	2022	2023

Total shareholder return (%)

9%	70%	40%
1-year TSR	3-year TSR	5-year TSR

ESG ratings

A						12.5 low risk(2)

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1. Restated for stock dividend issued in 2023
2. As at 13 January 2024

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ADCB AT A GLANCE

A responsible bank driving strong progress on sustainability

2023 ADCB Annual Report

DRIVEN BY PEOPLE. DESIGNED FOR THE FUTURE.

Climate

Joined UN NZBA

Became third bank in MENA to join UN Net Zero Banking Alliance (NZBA)

Customers and Communities

280,000+

Accounts to unbanked or underbanked customers(1)

Employees

45%

Female employees(1)

Governance

18%

Female representation at the Board level(4)

AED

125bn

target

Tripled sustainable finance target to AED 125 bn by 2030

USD

650 mn

Green Bond

Successful issuance of second green bond, 2.9x oversubscribed

1.3 mn+

Number of participants in financial literacy initiatives(1)

110,000+

Active SME and microbusiness clients(1)

40%

Emirati representation in ADCB Group(2)

300,000+

Employee learning hours in 2023(3)

94%

Employees formally trained on information security, data privacy and protection

100%

Compliance with the UAE Information Assurance Standard, which comprises 698 information security related controls

1. ADCB UAE only
2. As per UAE CB definition, the Emiratisation ratio excludes non-financial entities, such as ITMAM, ADCP, ADCE and outsourced employees
3. UAE operations only
4. ADCB ranked highest among major GCC banks for female board representation based on S&P Global Market Intelligence, September 2022

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