B 5–7 8–11 12–17 Leading Through Chairman’s Message Group CEO’s Message 18–21 22–23 26–29 Group CFO’s Message Financial Highlights Economic Overview 32–37 40–47 50–55 Board Roundtable Strategy Management’s Discussion & Analysis 58–69 72–79 80–81 Business Review Sustainability Awards & Recognition 84–89 90–93 94–109 Board of Directors Profiles Executive Management Corporate Governance Profiles Report 110–116 117–192 Risk Management Consolidated Financial Statements His Highness Sheikh Khalifa bin Zayed Al Nahyan President of the United Arab Emirates and Ruler of Abu Dhabi Supreme Commander of the UAE Armed Forces 2 His Highness Sheikh Mohammed bin Zayed Al Nahyan Crown Prince of Abu Dhabi Deputy Supreme Commander of the UAE Armed Forces Chairman of the Abu Dhabi Executive Council 3 Ambition and discipline propel us forward, as a leader, as we work to create the most valuable bank in the UAE. ADCB’s success is built on sheet, and now, even as the delivering extraordinary service to regional and global economy has our customers and communities. become more challenging, growth Offering a better way to bank, we continues. have carved out a leading role in The qualities that give rise to the banking sector and this region enduring success become all through a clear, focused strategy the more apparent when times and its disciplined execution. This get tough. And they continue to led to a series of record-breaking differentiate ADCB as the bank you years and a very strong balance can count on, going forward. 4 We built this Bank around human needs. At ADCB, we all work together to serve the customer. This is our LEADING THROUGH first priority and the heart of our business culture. Net Promoter Score™,1 a customer satisfaction metric, Putting is embedded into how every employee is evaluated. Smart digitisation — as exemplified by uBank, our new Service First digital banking centre in Yas Mall — is helping to sustain our edge in customer service. With an industry-leading mobile app, superior Internet banking, and e- platforms for business, we continue to raise the bar for a differentiated customer experience. 1 NPS is well-recognised as the ultimate measure of customer advocacy. “Net Promoter Score” and “NPS” are trademarks of Satmetrix Systems Inc., Bain & Company, and Fred Reicheld 5 Our strategy has not changed. Built for sustainable growth in the face of changing market dynamics, LEADING THROUGH and proven in the marketplace, our strategy keeps us focused on the UAE, on a stable liability structure, Continuity on a culture of service excellence, on robust risk management and on developing our people. We continue to execute this focused strategy with great discipline. We also lead with a remarkably stable management team. Continuity of strategy and of leadership is a powerful combination that, we believe, has led to our consistently strong performance. 6 LEADING THROUGH Resilience ADCB is a bank designed to thrive no matter what the markets bring. The low growth macro environment presents a set of challenges we are well- prepared to face. Our disciplined risk management and corporate governance continue to set us apart in this sector and region. Offering clear strengths and proven resilience, we can help our customers and stakeholders move forward with confidence. As a leader, we continue to invest in our future, renewing our core banking infrastructure whilst continually enhancing customer experience. As the economy of the UAE continues to diversify and to grow, we continue to seek a leading share of that growth. 7 Chairman’s Message Eissa Mohamed Al Suwaidi Chairman Whilst profitability declined, 2016 On behalf of ADCB’s Board saw good results in all other key performance metrics. Operating of Directors, I am pleased to income of AED 8.495 billion was up 3% over 2015 and our return on report that the Bank has equity remained strong at 15.7%. delivered another strong year of performance, particularly in light of the challenges of the low oil price environment. 8 Net Profit Recommended Dividend per Share (AED billion) (AED) 4.157 0.40 We expect the heightened economic challenges to The Board also confirmed the importance of continuing persist into 2017 and beyond. However, we believe that investment in creating a superior and differentiated the Bank’s proven strategy, commitment to service customer experience, through digitisation initiatives excellence, and strong, well- established governance and sustained focus on customer service. We standards will continue to serve shareholders well. believe that the Bank has built a distinct advantage in With our resilient balance sheet and strong franchise, customer service, and that maintaining and extending we remain focused on delivering sustainable growth this advantage is critical to future success. and improving long- term financial performance and ADCB continues to make gains in cost control, whilst returns for shareholders. also driving efficiency throughout its operations with initiatives such as Itmam shared services and improvements to service standards and speeds. Gains in efficiency deliver both savings and enhancements Building On a Proven Strategy in customer service. We believe the Bank’s internal service model to be exemplary, with its sustained In September, the Board reviewed and confirmed the focus on improvement. Bank’s strategy. This strategy was devised to build a Well- capitalised and with a strong balance sheet, robust and resilient leader in the UAE financial sector, ADCB remains a healthy institution positioned as the and has proven to be highly effective in that regard. leading bank focused primarily on the UAE. Our credit The strategy includes growth through a UAE- centric quality remains strong, and the Bank continues to approach, a stable and conservative liability base, a aspire to grow based on prudent risk management. culture of service excellence and efficiency, diligent risk management, and highly talented staff. 9 Book Value per Share (AED) 5.07 216 4.76 215 4.31 214 3.88 213 3.63 212 3.23 211 Shareholding Structure 62.52%* 23.28% 14.20% Abu Dhabi Investment Free Float: Free Float: Council (ADIC) Domestic Foreign * Following our buyback programme concluded in January 2015, the Bank has cancelled 397,366,172 treasury shares. The new issued share capital is AED 5,198,231,209 (Effective 8 January 2017) 10 2017 the Board will commission Management has the full support Recommended an external review of the Bank’s of the Board as it leads the governance framework aimed at Bank through this challenging Dividend helping the Bank to improve its trading environment. Together governance practices even further. we will continue to monitor We continue to deliver good value conditions closely and will take Your Board believes that ADCB has to our shareholders. Since 2010, actions as necessary. our dividend per share has grown developed a positive culture, and year on year, while our payout ratio that management and staff are has consistently been around the suitably incentivised to maintain 50% mark. As a result of ADCB’s and further improve the culture. performance in 2016, the Board The Board influences the Bank’s Extending Our has recommended a cash dividend culture by setting the appropriate Appreciation of AED 0.40 per share, translating tone in its deliberations (particularly to a payout of AED 2.079 billion, on strategy and risk matters), and On behalf of the Board and all at equivalent to 50% of net profit. by its selection and incentivisation ADCB, I extend our most sincere This is subject to approval by of senior staff. Your Board intends appreciation and gratitude to His the shareholders at the Annual to make efforts to develop Highness Sheikh Khalifa bin Zayed General Meeting. this further in 2017. Al Nahyan, the UAE President and Ruler of Abu Dhabi; to His Highness Sheikh Mohammed bin Zayed Al Nahyan, Abu Dhabi Crown Continued Focus Looking Ahead Prince and Deputy Supreme Commander of the UAE Armed on Governance and Forces; to His Highness Sheikh We expect 2017 to be another Strengthening the Mansour bin Zayed Al Nahyan, challenging year for financial Bank’s Culture Deputy Prime Minister and Minister services globally, and liquidity of Presidential Affairs; and to the remains an ongoing concern. As in prior years, the Board UAE Central Bank. However, the UAE’s economy remained active and engaged remains well- diversified, strong I also extend the continued throughout 2016, conducting 62 and growing. Monetary policy gratitude and appreciation of the full Board or Committee meetings. remains accommodative. As a Board to our shareholders, our The Board also engaged regularly country and a market, the UAE is valued customers, and the ADCB with management outside of full strongly positioned in the regional executive management team and Board or Committee meetings. and global economy, and we are employees for their continued Your Board is diverse and confident in its future. The Bank dedication and commitment. engaged, with a good mix of stands by its enduring commitment skills and strengths. In particular, to the long- term economic your Board communicates development of the UAE. well with management and During 2017 the Board will guide Eissa Mohamed Al Suwaidi constructively challenges management in continued delivery Chairman management’s activities. of the Bank’s strategy, oversee The Board continues to work with any transitions required as a management in our shared aim result of the Basel III and IFRS 9 to excel in corporate governance. implementations, seek to continue Having met or exceeded nearly all of leading the market in corporate the Basel Committee’s Guidelines governance practices, and on Corporate Governance, during continue to assess and develop the Bank’s corporate culture. 11 Group CEO’s Message Ala’a Eraiqat Group Chief Executive Officer Member of the Board of Directors 2016 was challenging, and being I am pleased to report that close to our customers and their businesses, we are well aware of ADCB delivered another the effects of the lingering low oil price environment for various year of strong performance.