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First Abu Dhabi Bank first-half profit jumps 50% to Dh8 billion

Almost Dh50 billion net incremental lending was extended by FAB year-to-date, which is a record for the group for any half-year period

First Abu Dhabi Bank (FAB), the biggest UAE lender, reported on Thursday a 50 per cent jump in first-half net profit to Dh8 billion underpinned by higher revenue and moderate cost of risk.

In a statement, FAB said its total income at Dh12.5 billion surged 31 per cent year-on-year, including Dh3.1 billion net gain on sale of a majority stake in its payments firm Magnati.

Hana Al Rostamani, group CEO, said FAB delivered a strong performance in the first six months of 2022 despite heightened global market volatility.

“Our core businesses maintained solid growth momentum reflecting healthy pipeline execution across our diversified franchise, and our ongoing strategic focus on deepening client relationships.”

She said almost Dh50 billion net incremental lending was extended by FAB year-to-date, which is a record for the group for any half-year period.

“This demonstrates buoyant regional activity, FAB’s leading origination capabilities, and the fundamental strength of our balance sheet as we continued to deploy our resources and expertise to support our client franchise with their local and cross-border banking needs.”

“Looking ahead, we must recognise a more challenging global economic outlook marked by turbulent market conditions and inflationary pressures. As we enter the second half of the year, we remain committed to our clients and stakeholders, and confident in our ability to deliver sustainable shareholder returns as we pursue our growth and transformation plans,” said Al Rostamani.

James Burdett, group CFO, said the bank produced another solid set of results in the second quarter with a net profit of Dh2.9 Billion, up 13 per cent sequentially on an underlying basis, bringing first half 2022 profit to Dh8.0 billion. Annualised return on tangible equity for the first half of 2022 improved to 19.5 per cent from 13.6 per cent in H1’21.

“In the last quarter, all our core businesses delivered top line growth sequentially, led by a double-digit growth in investment banking and corporate and commercial banking, which is a strong result in the context of adverse global market conditions. Risk was prudently managed across the Group, while the year-on-year growth in operating expenses reflects continued investments in franchise growth and transformation,” he said.

FAB maintained a strong liquidity position, with group liquidity coverage ratio at 135 per cent, and the balance sheet is optimally positioned to continue to benefit from rising interest rates. Despite balance sheet growth and market and regulatory headwinds, capital buffers remain strong, with Common Equity Tier 1 (CET1) at 12.6 per cent, said Burdett.

Operating expenses surged 10 per cent in the quarter to Dh1.6 billion due to continued investments in franchise growth and transformation.

The bank’s non-performing loans ratio was at 3.6 per cent in the quarter, down from 3.9 per cent a year earlier and 3.8 per cent in the first quarter. Its liquidity coverage ratio was 135 per cent, up from 119 per cent a year earlier.

Loans, advances and Islamic financing rose six per cent to Dh459 billion sequentially and 12 per cent year to-date. Double-digit loan growth reflects sustained business momentum, while liquidity, asset quality and capital position remain strong

Customer deposits at Dh648 billion was up eight per cent sequentially and five per cent year to date; CASA balances at Dh 291 billion, are up 15 per cent yoy basis.

— issacjohn@khaleejtimes.com