First Abu Dhabi Bank's full-year profit jumps 19% on investment gains

Net income for 2021 climbed to $3.4 billion, beating analysts' estimates

First Abu Dhabi Bank’s headquarters in Abu Dhabi. Photo: First Abu Dhabi Bank

First Abu Dhabi Bank, the UAE’s largest lender by assets, reported a 19 per cent jump in its 2021 profit on the back of higher net fee and commission income and gains on investments as the Arab world's second-largest economy continues to recover from the Covid-19 pandemic.

Net profit attributable to shareholders for the year climbed to Dh12.5 billion ($3.4bn), the lender said in a statement on Thursday to the Abu Dhabi Securities Exchange, where its shares are traded.

The results beat the average forecast of 10 analysts on Refinitiv's Eikon data that had estimated a Dh12bn net profit.

Net gain on investments and derivatives surged more than six-fold to Dh6.48bn, while net fee and commission income rose 4 per cent to Dh3bn.

"2021 has been a year of a strong economic rebound, with unprecedented opportunities for innovation and growth, despite continued uncertainties due to Covid-19," said Sheikh Tahnoon bin Zayed, chairman of First Abu Dhabi Bank.

"Against this backdrop, the UAE has once again demonstrated great vision and leadership, leading the way towards recovery, regionally and globally, on the back of its world-class vaccination programme, monetary and fiscal stimulus measures including the UAE Central Bank Tess programme, structural reforms and plans to drive long-term economic growth and prosperity."

The UAE introduced economic stimuli worth Dh388bn to offset the effects of the pandemic that tipped the world economy into its worst recession since the 1930s. That includes the central bank's Dh50bn Targeted Economic Support Scheme to boost liquidity in the financial and banking sector.

Last month, the central bank said it would extend support measures aimed at helping lenders mitigate the effects of the Covid-19 pandemic by six months until mid-2022 to back the country's continued economic recovery.

The bank's fourth-quarter profit rose 3 per cent to Dh3.3bn as non-interest income rose 45 per cent to Dh2.6bn, according to the statement.

The results beat EGF Hermes' estimate of Dh2.98bn and Arqaam Capital's Dh2.87bn projection.

"Our investment banking business, in particular, had an exceptional year, originating and structuring a number of landmark transactions, and leading new offerings and new company listings on the Abu Dhabi Stock Exchange in a record year for our equity markets," said Hana Al Rostamani, group chief executive of FAB.

"It was also a landmark year for FAB on the international front, as we continued to expand in our targeted markets, helped by the acquisition of Bank Audi Egypt."

Revenue from the bank's international operations grew 26 per cent year on year, with the Middle East and North Africa contributing 52 per cent last year compared with 39 per cent in 2020.

Total assets jumped 9 per cent year on year to reach Dh1 trillion and customer deposits rose 14 per cent to Dh614bn. Loans, advances and Islamic financing increased 6 per cent to Dh410bn.

FAB’s board of directors recommended dividends per share of 70 fils equivalent, split into 49 fils in cash and 21 fils as scrip dividend in lieu of cash to enable future growth of the bank, it said.

The UAE economy is “seeing signs of a strong recovery”, said Junaid Ansari, senior vice president of investment strategy and research at Kamco Invest. “The real estate sector remains robust and private sector investment is picking up. All of this is reflected in the higher profits reported by banks.”

Dubai’s property market is bouncing back strongly as the UAE’s economy continues to recover from the pandemic.

The emirate registered 61,241 sales transactions worth Dh151.07bn last year compared with the Dh71.87bn worth of transactions it closed in 2020, making 2021 the best year for total transactions since 2013 and the highest in value since 2009, according to the latest data from Property Finder.