The bank, one of two UAE banks on an informal seven-member coordinating committee negotiating Dubai World's restructuring plan, had $1.8 billion worth of exposure to the indebted state conglomerate, the bank said.
"The enforcement of provisions and impairments, especially those connected with ADCB's exposure to Dubai World, resulted in reporting a net loss," the bank's chairman, Eissa Al-Suwaidi, said.
The lender also reported a net loss of $144.58 million in the second quarter compared to a net profit of $80.32 million during the same period a year earlier.
Total operating income for the first half witnessed an increase of seven percent over the corresponding period a year earlier, reaching at $675.27 million.
An 11 percent year-on-year rise in net interest income and increased revenue generation from associates which stood at $52.82 million boosted the first half income.
However, operating income in the second quarter dropped five per cent to $329.46 million compared to the first quarter of this year, the bank said.
ADCB's operating expenses remained stable at $217.82 million in the first half compared to $211.29 million during the same period last year, with cost to income ratio at 32 percent compared to 33 percent in the first six months of 2009. Staff costs for the first half remained stable at $119.26 million compared to $120 million last year.
While the net impairment allowances for the first six months were $540.21 million, impairment allowance on doubtful loans amounted to $459.34 million compared to 536 million dirhams during the corresponding period last year.
The bank reported $526.6 million worth of individual impairment provisions as recoveries stood at $27.22 million. Its non-performing loans ratio was 5.4 percent, while the provision coverage ratio stood at 76.7 percent, excluding exposure to Dubai World.
Impairment allowances on investment securities stood at $59.35 million in the first half while impairment on the bank's credit-default swap portfolio was $21.51 million.
"As a result of the current economic environment, both corporate and consumer segments continue to experience high levels of stress and therefore we have had to take significant impairments in the first half of 2010," said Al-Suwaidi.
ADCB's total assets aggregated $45.36 billion as of June 30, 2010, representing controlled and focused growth of four percent over Dec. 31, 2009. Aggregated customer loans as of June 30, 2010, increased to $32.34 billion from $31.74 billion on Dec. 31, 2009.
The bank posted a 36-percent decline in net profit to $61.26 million in the first quarter of this year, but in 2009, record provisions dragged ADCB to a much wider fourth quarter loss than expected, highlighting the scale of the debt crisis among the regional companies to which it is exposed.
Besides ADCB, four other leading Abu Dhabi banks released their results in July, but the second-biggest bank by assets in the emirate was the only one to report loss due to Dubai World exposure.
While First Gulf Bank, Abu Dhabi's second-largest bank by market value, reported a two-percent rise in its second-quarter profit to $214.3 million, Union National Bank witnessed a 25-percent profit increase to $92.57 million in the three months to June 30. Similarly, National Bank of Abu Dhabi and Abu Dhabi Islamic Bank reported 10.4 percent and 56 per cent increase in profit respectively in the second quarter.