Abu Dhabi Commercial Bank, the UAE’s third-largest lender, reported a 14 per cent rise in its second-quarter net profit owing to a higher fee income, lower cost of funds and an improved cost-to-income ratio. Net profit for the three months to June 30 increased to Dh1.402 billion, the lender said in <a href="https://www.adx.ae/English/Pages/NewsDetails.aspx?viewid=20210718140710-ADCB" target="_blank">a statement</a> to Abu Dhabi Securities Exchange, where its shares trade. Non-interest income rose 41 per cent year on year to Dh840 million, while its cost-to-income ratio of 33.4 per cent improved 150 basis points, year on year, owing to higher revenue, merger synergies, digital transformation and other efficiencies. “The growth in net profit is a result of the increase in a diversified revenue stream, disciplined cost control and a prudent approach to risk management,” Khaldoon Al Mubarak, chairman of ADCB, said. “As the business environment continues to improve, ADCB’s strong balance sheet, with comfortable capital and liquidity positions, provides it with a solid foundation for future growth.” Abu Dhabi’s economy is poised to grow by 6 per cent to 8 per cent over the next two years, driven by the oil sector, government spending, financial services and foreign direct investment. “Our solid fundamentals and resilience are reflected in a wide range of metrics, including sustained growth in [current and saving account] deposits, lower cost of funds, increased fee income, accelerated digital transformation and a continuously improving cost-to-income ratio,” Ala’a Eraiqat, group chief executive of ADCB, said. Since the start of its digital transformation programme in 2018, the bank has recorded more than 900,000 subscribers to its internet and mobile banking platforms. “The group is making good progress on implementing its five-year strategy, which places a leading digital offering at the centre of our vision,” the chief executive said. “The bank is increasing the pace of innovation, with eight new digital releases in the second quarter.” ADCB recorded impairment charges of Dh678m in the second quarter, up one per cent annually but four per cent lower than the previous quarter, it said. Its net interest income of Dh2.315bn was one per cent lower, year on year, and up nine per cent on the first quarter. The bank’s non-performing loans ratio<b> </b>was at 5.86 per cent, improved from 6.53 per cent at March-end, but 70 basis points higher, year on year. ADCB has already recorded “significant provisions” of Dh1.075bn against loans to NMC Health, which went into administration last year. The bank said it was “comfortable” with the scale of these measures as the healthcare group enters the final stage of a restructuring. The bank also remains “fully supportive” of the joint administrator’s three-year turnaround plan for the group.