Abu Dhabi's FAB optimistic about growth in 2022 amid higher oil prices

Bank remains open to new opportunities to expand its operations, senior executive says

First Abu Dhabi Bank reported a 19 per cent jump in its 2021 profit to Dh12.5 billion. Chris Whiteoak / The National

First Abu Dhabi Bank, the UAE’s largest lender by assets, is optimistic about growth this year, supported by an increase in the country's gross domestic product and higher oil prices, although the Ukraine conflict remains a concern, a top executive said.

The bank was expecting mid to high single-digit growth in 2022 before the escalation of the Ukraine-Russia conflict, James Burdett, group chief financial officer of FAB, said during an online media briefing on Monday.

“We are optimistic about growth, but clearly the recent events could change all that. It is too soon to tell what the impact will be from the Russian-Ukraine tension,” Mr Burdett said.

The lender reported a 19 per cent jump in its 2021 profit to Dh12.5 billion ($3.4bn) on the back of higher net fee and commission income and gains on investments amid the UAE’s economic recovery.

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.

On Monday, the lender approved the dividend distribution of 70 per cent of paid-up capital for 2021 for a total of Dh7.64bn, split between Dh5.35bn in cash and Dh2.29bn equivalent in new shares.

“Our dividend structure for the year reflects our focus on preserving capital to drive future growth and is the highest dividend distribution amongst UAE banks, in addition to the 46 per cent return generated by FAB’s share price in 2021,” said Sheikh Tahnoon bin Zayed, chairman of FAB.

The bank is also open to new opportunities to boost its expansion, said Karim Karoui, group head of mergers and acquisitions at FAB.

This month, FAB made a non-binding offer to buy a majority stake in Egypt's largest investment bank EFG Hermes. It also agreed to buy Bank Audi Egypt in January 2021 and received regulatory approval in April for the deal.

“We always remain open for opportunities as and when they come with an opportunistic mindset,” Mr Karoui said.

The UAE's economy continues to recover from the coronavirus pandemic and is expected to grow 4.6 per cent this year, Emirates NBD said.

Oil prices crossed the $100 per barrel mark last week for the first time in seven years after Russia attacked Ukraine. The global benchmark Brent was trading at $100.80 per barrel at 8.42pm UAE time, while US crude West Texas Intermediate was at $95.12 per barrel.