Abu Dhabi Commercial Bank, the UAE’s third-largest lender, delivered a 'resilient' performance amid testing times and its long-term growth fundamentals remain solid, executives said, as the bank reported a 4 per cent drop in the fourth quarter net income. Profit for the three months to the end of December 31, declined to Dh1.01 billion ($275.2 million), the bank said in a statement to the Abu Dhabi Securities Exchange, where its shares trade. The results was inline with Egyptian investment bank EFG Hermes' estimates as "higher revenue and lower opex [operating expenses] compensated for higher-than-expected provisioning". Quarterly net income fell primarily on account of higher impairment charges, climbing 3 per cent to Dh938m. Operating income for the period dropped 7 per cent to Dh3.06bn. "At a time when stable and powerful institutions are needed to support our businesses through unpredictable challenges, I am pleased to report that ADCB remained resilient during a challenging year," Ala'a Eraiqat, the lender's group chief executive, said. “In testing times, ADCB has drawn on its strengths – a robust balance sheet, disciplined governance and a high-performance culture – to navigate the complex issues raised by the global pandemic, softening global economic activity and low oil prices,” Khaldoon Al Mubarak, chairman of the ADCB board, said. The lender, which has embarked on a five-year strategy, has a commitment to governance that has helped it through successive market cycles, Mr Al Mubarak added. “As the UAE takes prudent measures to establish a solid platform for a broad recovery, ADCB is in a strong position to play a key role in delivering the country’s economic ambitions in the coming years.” Lenders globally are facing headwinds as operating conditions deteriorate and provisions for bad loans rise amid an increase in defaults. Profit margins are under pressure as interest rates remain low amid the pandemic-induced economic slowdown. The lender on Sunday also reported full year profit of 3.81bn, down 27 per cent from Dh5.24bn in 2019. Impairment charges for NMC Health Group, financial services firm Finablr and its associated companies, as part of the bank’s “prudent approach to provisioning”, weighed down its bottom line. Impairment allowances climbed to Dh3.99bn at the end of last year, rising from Dh2.66bn reported for 2019. Full-year operating profit before impairment allowances held steady at Dh7.95bn despite macroeconomic challenges. The lender, which completed its three-way merger with Union National Bank and Al Hilal Bank last April, said total integration costs incurred – excluding capital expenditure – reached Dh545m, “well below the budgeted Dh980m”. It recorded integration-related expenses of Dh153m in 2020, after reversing Dh74m of charges in the fourth quarter of last year. The lender said it also adjusted its operating model to account for “changing customer demand and behaviour”, with strong penetration of digital banking services. It reduced its branch network to pre-merger levels of 54 locations in the UAE, from 73 branches in the second quarter of 2020, and from a peak of 127 when it merged with UNB in May 2019. “We also continued to capture significant merger efficiencies, upgrading our final run-rate synergy target to Dh1bn from the original aim of Dh615m, while introducing additional cost optimisation measures,” Mr Eraiqat said. “As a result, operating expenses excluding integration costs decreased by 11 per cent in 2020 and the cost-to-income ratio improved by 190 basis points to 35.1 per cent.” On Monday, the lender appointed Sheikh Zayed Bin Suroor Al Nahyan to the board, replacing Abdulla Al Mutawa, who resigned after 24 years as an ADCB board member. During his tenure at the bank, Mr Al Mutawa has "contributed significantly to the development of ADCB into a top-tier banking group", Mr Al Mubarak said.