FAB’s quarterly profit up 61% on higher rates

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UAE’s First Abu Dhabi Bank, also known as FAB, said its second-quarter net profit jumped by 61 per cent year-on-year (YoY), driven by higher interest and non-interest income and improved margins.

FAB’s net profit in Q2 2023 was $1.1bn (Dhs4.2bn) while its first-half profit reached Dhs8.1bn, the highest ever achieved by the banking group in a half-year period. The bank’s net interest income rose by 32 per cent YoY to reach Dhs4.5bn in the quarter, while its non-interest income surged by 34 per cent to Dhs2.3bn.

The banking group’s operating income reached Dhs6.8bn in Q2 2023, a 37 per cent YoY increase compared to Dhs5bn in the second quarter of 2022, by sustained momentum across all business lines, continued strength in feebased businesses, and higher market-related income.

“The results demonstrate that the group continues to manage risks, control costs and maintain a robust foundation underpinned by strong organic capital generation,” FAB said in a bourse filing. The bank’s common equity Tier 1 (CET1) strengthened to 13.6 per cent in the three months ended June 30 compared to 12.6 per cent in the same period a year earlier.

The bank highlighted that positive growth momentum was sustained across all business lines during the quarter under review as the Abu Dhabi-listed lender continued to invest in people, products and technology to enhance customer experience across its portfolio.

Net impairment charges plunged by 15 per cent to Dhs676m in Q2 2023 from the first quarter.

“FAB posted a very strong set of financial results, as evidenced by record underlying revenue and profits both in the second quarter and in the first half of 2023,” Lars Kramer, group chief financial officer at FAB said, adding that return on tangible equity improved substantially to 18.6 per cent.

FAB’s total assets edged up 3 per cent year-to-date (YTD) Dhs1.14tn sustained by sizeable deposit inflows deployed across loans and high-quality liquid assets. “Customer deposits have grown by 6 per cent YTD to reach Dhs745bn with current account and savings account balances at a new high of Dhs333bn, reflecting strong performance in cash management,” the banking group said in a bourse filing.

FAB focuses on shaping the future

With a global footprint spanning 20 markets across five continents, FAB’s international franchise remains a key contributor to the banking group’s liquidity, profitability and revenue diversification, generating 20 per cent of first-half group revenues.

The bank has facilitated more than $20bn worth of sustainable projects to date, including $10.7bn in the first half of the year, achieving over 25 per cent of its 2030 target of $75bn. FAB is enhancing its digital capabilities and customer experience, which has led to a more than 30 per cent increase in digital registrations and active users – a significant increase of over 160,000 in new-to-bank customers year-to-date.

The Abu Dhabi-based lender is shaping the future of the region’s banking and payments industry, through new partnerships and ecosystem builds and the co-investment with Brookfield Asset Management for the proposed acquisition of Network International to create the MENA region’s biggest payments platform.

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