First Abu Dhabi Bank’s Q1 2023 net profit up 70%

UAE’s First Abu Dhabi Bank, also known as FAB, said its first-quarter net profit surged by 70 per cent year-on-year (YoY) driven by sustained momentum across all business segments and the bank’s ability to navigate evolving market conditions.

The bank’s net profit in the first quarter was $1.06bn (Dhs3.9bn), excluding the Dhs2.8bn from the sale of a stake in its payments business Magnati in the first quarter of 2022, translating to an annualised return on tangible equity (RoTE) of 18.5 per cent.

The banking group’s operating income jumped 51 per cent YoY to reach Dhs6.7bn compared to Dhs4.5bn in the first quarter of 2022, driven by strong growth in both net interest and non-interest income.

Impairment charges in Q1 2023 were at Dhs798m, up 74 per cent from a year earlier implying an annualised cost of risk of 62 basis points (bps).

“Building on a record year in 2022 and prudent actions taken in the fourth quarter of last year, the notable improvement across these metrics was driven by sustained momentum across all business segments and product lines, cost and risk discipline, and our proven ability to navigate evolving market conditions,” said Hana Al Rostamani, First Abu Dhabi Bank’s group CEO.

The bank’s total assets edged up 21 per cent YoY and 7 per cent sequentially to Dhs1.2tn sustained by sizeable deposit inflows deployed across loans and high-quality liquid assets. “Customer deposits added Dhs80bn (+11 per cent year-to-date) to Dhs781bn, with nearly half gathered from our international franchise,” the banking group said in a bourse filing.

#FAB reports a strong start to 2023 as growth strategy delivers superior returns, with a first quarter Group net profit of AED 3.9 billion.

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For more information on Q1 2023 results, please visit: https://t.co/VCcOP8NxRw pic.twitter.com/SYnzyzYKqV

— FAB Connects (@FABConnects) April 27, 2023

First Abu Dhabi Bank said its international operations remain a key contributor to the group’s liquidity with customer deposits soaring by 27 per cent or Dhs41bn in a single quarter. Similarly, revenues from international operations represent 23 per cent of FAB’s Q1 2023 group revenues.

FAB’s growth strategy

Meanwhile, FAB CEO said the lender is uniquely positioned to navigate uncertain times, drive sustainable growth and shape the future of banking in the UAE and the broader region.

“The group is in a strong position to pursue our growth journey and to continue to drive superior and sustainable shareholder returns,” the Abu Dhabi-based lender said.

Read: Standard Chartered faces fresh questions after report of First Abu Dhabi Bank takeover bid

The bank has repeatedly quashed reports of an imminent bid for Britain’s Standard Chartered, saying it was not currently evaluating an offer for the London-listed bank. News of the potential offer first came on January 5 when FAB said it had considered a bid for Standard Chartered but was no longer doing so.

However, Al Rostamani told a local daily newspaper in April that the banking behemoth is open to acquisition opportunities in the Middle East and North Africa and in markets beyond as long as the deals make commercial sense and create value for the banking group.

First Abu Dhabi Bank, which was created through the merger of the National Bank of Abu Dhabi and First Gulf Bank in 2017, has actively been pursuing acquisitions in the broader MENA region for the past few years.

The bank’s Egyptian business was rebranded as ‘FABMISR’ following the completion of its merger with Bank Audi Egypt in June 2022. FABMISR is one of the largest foreign banks operating in Egypt with more than $10bn in assets, 69 branches and 207 ATMs as of March 31, 2022.

The bank has made significant progress towards its net zero journey by setting carbon emission reduction targets across the highest emitting sectors in the group’s portfolio.  Last year, First Abu Dhabi Bank facilitated more than $9bn worth of sustainable projects as part of its target to disburse $75bn by 2030.

With a market capitalisation of Dhs149.8bn as of April 27, 2023, First Abu Dhabi Bank is a global bank and regional banking powerhouse with operations in 20 markets from the Americas to Asia.

Read: UAE’s FAB facilitated over $9bn in sustainable projects in 2022