Abu Dhabi, UAEThursday 4 June 2020

First Abu Dhabi Bank in talks to acquire Bank Audi’s Egypt subsidiary

Lender said that a working group has been formed to assess the potential acquisition

FAB maintained a strong balance sheet amid challenging market conditions. Chris Whiteoak / The National
FAB maintained a strong balance sheet amid challenging market conditions. Chris Whiteoak / The National

First Abu Dhabi Bank, the UAE’s largest lender by assets, confirmed on Thursday that it is in discussions with Bank Audi to acquire its fully-owned subsidiary in Egypt.

The bank – which was formed in 2017 following a merger of National Bank of Abu Dhabi and First Gulf Bank – said that deal talks are in line with its strategy to pursue growth opportunities in the UAE and targeted markets.

“A working group has been formed to assess the potential acquisition,” First Abu Dhabi Bank said in a statement to the Abu Dhabi stock market, where its shares trade.

“At the current time, no valuations have been announced and there is no certainty that these discussions will result in a transaction, which is subject to regulatory approvals.”

Bank Audi Egypt has 50 branches with total assets of $4.4 billion (Dh16.1bn) at the end of September, Bank Audi's chief financial officer Tamer Ghazaleh told Reuters. Lebanon-based Bank Audi began operations in Egypt after acquiring Cairo Far East Bank in 2006.

Bank Audi Egypt reported a 6.5 per cent rise in net profit in the third quarter, largely due to an increase in net interest income and gains from financial investments.

Net profit for the three months to September 30 rose to 1.089bn Egyptian pounds (Dh253.3m), according to the financial statement on the bank’s website. Net interest income during the period jumped to 2.1bn pounds from 1.74bn pounds during the previous year.

First Abu Dhabi Bank, on the other hand, reported a 3 per cent year-on-year rise in its third quarter net profit on higher operating income.

Net income for the three-month period to the end of September rose to Dh3.11bn while operating income climbed 5 per cent year-on-year at the end of third quarter to Dh5.07bn.

Egypt’s banking system is expected to be stable over the next 12 to 18 months as lenders maintain high liquidity, owing to a growing economy that will facilitate more loans, according to Moody’s Investors Service.

“The economy is growing robustly – we project real GDP growth of 5.8 per cent in 2020, supported by declining interest rates,” said Constantinos Kypreos, senior vice president at Moody’s.

“And banks retain good access to stable, deposit-based funding and are very liquid, especially in local currency.”

Moody’s said it expects banks’ profitability to improve, bolstered by strong balance-sheet growth and a projected acceleration in credit growth by 12 to 15 per cent.

Updated: January 23, 2020 05:19 PM

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