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Abu Dhabi, UAESunday 18 November 2018

FAB Q2 net profit up 19% on lower costs, beating estimates

Impairment charges fell 31% during the period

Every First Abu Dhabi Bank (FAB) branch will be closed between November 29 and December 4. Chris Whiteoak / The National
Every First Abu Dhabi Bank (FAB) branch will be closed between November 29 and December 4. Chris Whiteoak / The National

First Abu Dhabi Bank, the UAE's biggest bank by assets, reported a 19 per cent year-on-year rise in its second-quarter net profit, beating analysts' estimates, as money set aside to cover bad debt declined and costs fell.

Net income for the three-month period ending June 30 rose to Dh3.1 billion, the lender said in a statement on Tuesday. Total operating income for the period climbed by 5 per cent year-on-year to Dh4.92bn, it said.

The second quarter net profit was above SICO Bahrain’s Dh2.88bn and Dh2.8bn estimates of Egyptian investment bank EFG Hermes, according to Reuters data.

“FAB has built on the positive momentum generated at the start of the year to deliver another strong set of results in the second quarter of 2018," the bank’s group chief executive Abdulhamid Saeed said.

The FAB group’s performance was achieved on the back of “healthy asset growth, and significantly lower risk and operating costs, as we continued to capitalise on solid asset quality and provision buffers, as well as substantial synergies realised from the merger”, he noted.

Banks in the Arabian Gulf region are bouncing back as loan growth gradually improves and provisions for troubled loans decline. The financial profiles of GCC banks are expected to stabilise further by the second half of 2018 as market conditions pick up amid an economic recovery, rating agency Standard & Poor’s said in a report earlier this year.

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First Abu Dhabi Bank sells Jordan business to Société Générale

First Abu Dhabi Bank posts first-quarter gain

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FAB, which was created through last year's merger of National Bank of Abu Dhabi and the First Gulf Bank, said foreign exchange and investment income rose by 26 per cent to Dh571 million for the quarter.

Net impairment charges contracted 31 per cent in the second quarter to Dh423m. Operating expenses fell by 4 per cent Dh1.34bn, it said.

Loans and advances for the period climbed by 7 per cent year-on-year to Dh345bn, while customers’ deposits rose 14 per cent to Dh431bn from a year-earlier.

The lender’s first half net profit, also climbed by 10 per cent, crossing the record Dh6bn threshold, FAB said.

The bank, which is majority owned by the Abu Dhabi government, is in the process of integrating its operations under the FAB banner.

“In light of a strong first half and as we enter the final stretch of our integration journey, FAB is firmly on track to deliver another record performance for 2018,” Mr Saeed said. “Despite persistent challenges, the economic outlook over the medium-term remains positive, underpinned by continuous reforms and initiatives to drive growth.”

The bank remains “fully committed to supporting" Abu Dhabi’s stimulus plan announced earlier this year, which will help accelerate economic growth and diversification, he noted.

The lender is rationalising its asset base and is exploring new markets to add fresh lines of revenues as it continues the integration drive.

FAB in March said it received a licence from the Saudi Arabia Monetary Authority to establish a commercial banking business as foreign banks converge on the Arab world's largest economy to make deals amid ongoing reforms.

The bank earlier this month said it has signed an agreement with French bank Société Générale's Jordan unit to sell its interests in the Hashemite kingdom.

The deal will cover the transfer of the bank's employees and relevant suppliers' contracts to Société Générale de Banque Jordanie, FAB said in a statement at the time, without disclosing financial details of the deal.

The sale followed a careful review to select a buyer that fit the needs of both employees and customers, FAB said, adding that the parties have received approval for the transaction.