AJMAN BANK

1. Company Overview & Earnings Context

Ajman Bank PJSC is a Dubai Financial Market-listed Islamic bank headquartered in Ajman. The Bank operates through ten branches and two pay offices in the UAE and provides Sharia-compliant banking, financing and investment products including Murabaha, Ijarah, Mudaraba, Musharaka, Wakala and Sukuk. The Ajman Government owns 33.1% of the Bank's issued capital.  

For the nine months ended 30 September 2026, Ajman Bank delivered strong growth in gross income and financing assets, but reported earnings declined. Profit for the period was AED 326.1 million, down 14.2% YoY from AED 380.0 million, while EPS declined to AED 0.120 from AED 0.141.

The earnings decline was mainly attributable to a substantially higher depositors' share of profits, increased administrative expenses and a swing from a prior-year ECL reversal to a current-period credit-loss charge. These pressures more than offset higher income from Islamic financing and investment securities. 

Q3 was considerably weaker, with net profit declining to AED 79.7 million from AED 134.9 million, a decrease of approximately 41% YoY. The quarter was affected by higher depositor profit distributions and a AED 32.4 million ECL charge.

2. Financial Performance Snapshot

• Income from Islamic Financing & Investing Assets: AED 976.8 Million (+19.2% YoY)

• Income from Islamic Investment Securities: AED 201.8 Million (+14.4%)

• Fees, Commissions & Other Income: AED 169.4 Million (-17.2%)

• Total Operating Income Before Depositors' Share: AED 1.348 Billion (+12.3%)

• Depositors' Share of Profits: AED 676.6 Million (+25.1%)

• Net Operating Income: AED 671.3 Million (+1.8%)

• Staff Costs: AED 200.7 Million (-0.5%)

• G&A Expenses: AED 106.6 Million (+40.5%)

• Depreciation: AED 24.1 Million (+33.8%)

• ECL Charge: AED 23.7 Million vs. AED 49.5 Million reversal

• Reversal of Impairment on Non-Financial Assets: AED 35.5 Million

• Profit Before Tax: AED 351.7 Million (-15.0%)

• Net Profit: AED 326.1 Million (-14.2%)

• EPS: AED 0.120 vs. AED 0.141

• Q3 Net Profit: AED 79.7 Million (-40.9% YoY)

• Q3 EPS: AED 0.029 vs. AED 0.050

Ajman Bank's underlying revenue generation remained relatively strong. Income from financing and investing assets increased nearly 19%, driven particularly by Murabaha income increasing to AED 406.2 million from AED 327.6 million and Wakala income increasing to AED 188.6 million from AED 125.7 million. 

However, the increase in funding costs absorbed most of this growth. Depositors' share of profits increased by AED 135.6 million, resulting in net operating income increasing only 1.8% despite gross operating income rising more than 12%. 

3. Operating Performance & Major Programs

Ajman Bank continued expanding its financing franchise. Net Islamic financing and investing assets increased to AED 20.09 billion from AED 17.73 billion at December 2025, an increase of approximately 13.3%.

Gross financing and investing assets reached AED 20.71 billion. The largest components were Ijarah at AED 9.67 billion, Murabaha at AED 8.08 billion and Wakala at AED 3.50 billion. 

Credit quality also showed improvement in the composition of the financing book. Stage 3 exposures declined to AED 1.21 billion from AED 1.52 billion, while the associated Stage 3 ECL allowance declined to AED 293.4 million from AED 339.7 million. Total ECL allowance on financing and investing assets declined to AED 622.6 million from AED 687.3 million.  

The investment portfolio also expanded significantly. Islamic investment securities increased to AED 6.75 billion from AED 5.70 billion, primarily through higher Sukuk holdings. 

Performance differed considerably across operating segments. Wholesale banking remained the main earnings engine, generating AED 250.7 million of 9M operating profit, up from AED 197.0 million. Consumer banking profit, however, declined sharply to AED 8.2 million from AED 48.5 million, while Treasury profit decreased to AED 66.2 million from AED 134.3 million. 

During the period, Ajman Bank also obtained control over its former associate Makaseb 2 Real Estate Investment, which is now consolidated under IFRS 10. 

4. Key Performance Drivers

Financing growth supported gross income. Net financing and investing assets increased approximately 13%, driving a 19% increase in associated income. Murabaha and Wakala were particularly strong contributors.

Higher funding costs significantly diluted revenue growth. Depositors' profit share increased 25% to AED 676.6 million, substantially faster than the 12% growth in operating income before depositor distributions. Consequently, net operating income increased only 1.8%.

Fee income weakened. Fees, commissions and other income declined 17% to AED 169.4 million, creating another headwind to earnings diversification.

Credit-cost normalization reduced reported earnings. Ajman Bank recorded an AED 23.7 million ECL charge in 9M 2026 versus an AED 49.5 million reversal in the comparable period. This represents a roughly AED 73 million negative YoY swing in the impairment line. 

This was partly offset by a AED 35.5 million reversal of impairment on non-financial assets, meaning the net impairment effect across financial and non-financial assets was positive by approximately AED 11.8 million.

Administrative expenses increased materially. G&A increased more than 40% to AED 106.6 million, while depreciation increased approximately 34%. Staff costs, however, remained broadly stable.

Wholesale banking strengthened significantly. Wholesale operating profit increased about 27%, partly cushioning the deterioration in Consumer and Treasury profitability.

5. Balance Sheet, Backlog & Cash Flow

• Net Islamic Financing & Investing Assets: AED 20.09 Billion vs. AED 17.73 Billion

• Gross Islamic Financing & Investing Assets: AED 20.71 Billion vs. AED 18.42 Billion

• Islamic Investment Securities: AED 6.75 Billion vs. AED 5.70 Billion

• Cash & Central Bank Balances: AED 2.82 Billion vs. AED 4.27 Billion

• Customer Deposits: AED 22.32 Billion vs. AED 23.75 Billion

• Due to Banks & Financial Institutions: AED 6.08 Billion vs. AED 2.89 Billion

• Sukuk Financing Instrument: AED 1.81 Billion

• Total Equity: AED 4.41 Billion vs. AED 3.47 Billion

• Tier 1 Sukuk Issued: AED 1.10 Billion

• Financing ECL Allowance: AED 622.6 Million vs. AED 687.3 Million

• Capital Commitments: AED 65 Million

• Credit Commitments & Contingencies: AED 2.72 Billion

• Operating Cash Flow: AED (2.20) Billion

• Investing Cash Flow: AED (1.21) Billion

• Financing Cash Flow: AED +835.3 Million

• Period-End Cash & Cash Equivalents: AED 953.6 Million

• Dividend Paid: AED 250.0 Million

A notable balance-sheet development is the change in funding mix. Customer deposits declined approximately 6% from December 2025 to AED 22.32 billion, while amounts due to banks and financial institutions more than doubled to AED 6.08 billion from AED 2.89 billion. 

Equity strengthened substantially to AED 4.41 billion, primarily reflecting the AED 1.10 billion Tier 1 Sukuk issuance, partly offset by AED 250 million of dividends and the negative FVOCI movement. 

Cash flow was significantly negative. Operating activities consumed AED 2.20 billion, primarily because financing assets increased by AED 2.61 billion, customer deposits decreased by AED 1.43 billion and other operating assets expanded. The impact was partly funded by a AED 3.20 billion increase in amounts due to banks and financial institutions. 

Investing activities consumed another AED 1.21 billion, mainly reflecting net purchases of Islamic investment securities. Financing activities generated AED 835 million, primarily from the Tier 1 Sukuk issuance. Cash and cash equivalents consequently declined to AED 953.6 million from AED 3.53 billion at the start of 2026. 

Credit-related commitments and contingencies increased to AED 2.72 billion, including AED 786 million of commitments to extend credit and AED 1.78 billion of letters of guarantee. These are more relevant for a bank than a conventional industrial backlog; therefore, backlog/order book is not applicable. 

6. Investor Takeaway

Ajman Bank's 9M 2026 results show strong balance-sheet and gross-income expansion but weaker earnings conversion.

The positive underlying development is the expansion of the financing franchise. Net financing and investing assets increased more than 13% to AED 20.1 billion, while income from these assets increased 19%. Wholesale banking also delivered substantially higher profitability, and Stage 3 financing exposures declined by more than AED 300 million.

However, these gains were offset by several important earnings headwinds. Depositors' profit distributions increased 25%, fee and commission income declined 17%, G&A expenses increased 40%, and the impairment line moved from a large prior-year reversal to a current-year charge. Consequently, net profit declined 14% despite double-digit growth in gross operating income.

The funding profile warrants particular attention. Customer deposits fell to AED 22.3 billion while interbank funding increased sharply to AED 6.1 billion. This shift helped fund continued asset growth but also indicates greater reliance on institutional/wholesale funding, making future funding costs and deposit growth important investor indicators.

Asset-quality trends are more encouraging. Stage 3 exposures declined to AED 1.21 billion from AED 1.52 billion, and the financing ECL allowance fell to AED 622.6 million. The Bank also benefited from a AED 35.5 million reversal of impairment on non-financial assets. The period additionally saw favorable progress on properties acquired in settlement of financing obligations: the court ruled in the Group's favor and attachments were lifted, allowing title-transfer processes to proceed. 

Capital was strengthened materially through the AED 1.10 billion Tier 1 Sukuk issuance, providing additional capacity to support the expanding financing portfolio. At the same time, negative operating cash flow and the sharp reduction in cash equivalents reflect the combination of financing growth, deposit outflows and increased securities investment.

The key metrics to monitor going forward are therefore customer-deposit growth, funding costs and depositor profit share, financing growth, fee-income recovery, Consumer and Treasury profitability, G&A discipline, credit costs, Stage 3 exposures and returns generated from the enlarged Tier 1 capital base.

Deloitte reviewed the interim financial information under ISRE 2410 and issued an unmodified conclusion, stating that nothing came to its attention causing it to believe that the financial information was not prepared, in all material respects, in accordance with IAS 34. 

Overall, Ajman Bank continues to grow its core Islamic financing franchise and has strengthened its capital base, but 9M 2026 demonstrates that stronger asset growth has yet to translate into higher shareholder earnings. Improving the funding mix, controlling operating costs and restoring stronger earnings conversion will be central to the next phase of performance.