FAB reports Q1 group net profit of Dh2.4b

PANDEMIC IMPACT: FAB profit dropped by 22 per cent due to unprecedented market conditions.

First Abu Dhabi Bank, the largest UAE lender, reported on Monday a net profit of Dh2.4 billion for the first three months of 2020, down 22 per cent from the same 2019 period "mainly as a result of lower revenue due to rate cuts and unprecedented market conditions."
The bank also cited "prudent provisioning in light of a more challenging operating environment" as another reason for the profit fall.
"The group focused on maintaining a robust balance sheet during the period, with strong liquidity and capital ratios, as well as healthy asset quality metrics, leveraging its inherent strength and Covid-19 pandemic," FAB said in a statement.
Sheikh Tahnoon bin Zayed Al Nahyan, chairman of FAB, said the bank entered a period of unprecedented challenges for the global economy with an exceptionally strong balance sheet and capital position, enabling the bank to fully support customers and help to mitigate the wider economic impact by playing an integral role in the government's targeted relief measures. "FAB has worked with the public and private sectors throughout in a spirit of partnership and collective responsibility, to support the economic prosperity of our nation and extend support where it is needed."
Sheikh Tahnoon said Abdulhamid Saeed's appointment as UAE Central Bank governor would greatly benefit the banking sector and the wider economy "as we collectively navigate the way forward."
André Sayegh, group chief executive officer, said FAB delivered "a resilient performance in the first quarter of 2020 in an unprecedented and challenging market environment."
"Despite market headwinds, we have maintained a robust balance sheet and our capital, liquidity and funding position remain strong. This enables us to attract liquidity across our global network, underlining a flight to safety benefitting FAB in the current environment. In addition to being a major supporter to the private sector in the UAE, we continue to work closely with the UAE Government and other public sector entities in the financial domain to support the economy in all respects," said Sayegh.
FAB group CEO said the bank's achievements over the past few years, its inherent scale, market leadership and efficiency have allowed it to enter 2020 from a position of strength.
"As we move into the second quarter and beyond, we will continue to take the necessary actions to maintain our robust foundation and financial strength, and to enable us to continue to support our clients and communities through these challenging times. As a driver for the UAE economic growth and prosperity, we remain confident," he said.
The bank reported an operating income at Dh4.6 billion, 8.0 per cent lower year-on-year. While total assets surged 14 per cent to Dh835 billion, up 14 per cent year-on-year, loans and advances rose six per cent to Dh382 billion as customer deposits increased 15 per cent year-on-year to Dh497 billion. Bank's current account and savings account balances at Dh181 billion, up 12 per cent year-on-year.
While impairment charges at Dh738 million "reflect prudent provisioning due to a challenging operating environment," FAB maintained strong liquidity and funding profile with a liquidity coverage ratio at 110 per cent as of March-end 2020. Non-Performing loan ratio was at 3.5 per cent, while provision coverage ratio was at 95 per cent in the quarter. Common Equity Tier 1 ratio at 12.1 per cent, in excess of regulatory requirements, the bank said.
The statement said FAB was also among the first UAE financial institutions to launch relief measures for our customers, including the postponement of loan repayments and the suspension or reduction of fees and charges across a wide range of products in line with the directives of the UAE authorities. - issacjohn@khaleejtimes.com