FAB reports 4% rise in Q1 net income as impairment charges fall

Net income for the three-month period to the end of March climbed to Dh 3.1 billion

Abu Dhabi, United Arab Emirates - February 7th, 2018: FAB (First Abu Dhabi Bank) Head office - Business Park. Wednesday, February 7th, 2018. Twofour54, Abu Dhabi. Chris Whiteoak / The National
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First Abu Dhabi Bank, the UAE’s largest lender by assets, reported a 4 per cent year-on-year rise in first quarter net profit, meeting analyst estimates, as its loans portfolio grew and charges for bad loans fell.

Net income for the three-month period to the end of March climbed to Dh 3.1 billion, the lender said in a statement. The quarterly income was in line with the mean estimate of Dh3.07bn of analysts polled by Bloomberg.

Impairments for bad loans for the Abu Dhabi-listed bank shrunk 7 per cent per cent to Dh407 million, at the end of March.

Operating income climbed Dh4.9bn, a 1 per cent year-on-year and 3 per cent quarter-on-quarter rise. Operating expenses slid 1 per cent to Dh1.31bn at the end of the first three months of the year.

“Our performance during the first three months of 2019 has created a robust foundation for sustained growth momentum and we remain optimistic about the remainder of the year,” Abdulhamid Saeed, FAB’s group chief executive said in a statement on Monday. "Our successful integration .... [has] enabled us to improve our profitability, while continuing to prudently manage risk across our portfolios."

As the lender moves into the second quarter, it will continue to leverage competitive advantages, while further developing FAB's retail offering and strengthening its corporate and investment banking businesses, he noted.

FAB’s total assets at the end of the first quarter climbed 8 per cent to Dh733bn from a year-earlier period. Loans and advances rose 6 per cent to Dh359bn, while customer deposits surged 7 per cent to Dh433bn for the period, it added.

The lender, formed through the merger of the two biggest lenders in Abu Dhabi - National Bank of Abu Dhabi and First Gulf Bank in 2017, earlier this month denied reports it plans to merge with Abu Dhabi Islamic bank to create the biggest banking entity in the Middle East.

Banks in the UAE are consolidating amid efforts to strengthen balance sheets, cut costs and boost profitability. Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank are merging to create the third biggest lender in the UAE with combined assets of Dh420bn. The UAE’s biggest Sharia-compliant lender, Dubai Islamic Bank, earlier this month said it is considering takeover of rival Noor Bank and will appoint advisers to conduct due diligence on the deal.

FAB, which completed the integration of legacy systems of NBAD and FGB in the fourth quarter of last year, is looking to further grow its small- and medium-sized enterprises business, delivering double-digit growth in 2019. The lender is looking to increase its share of the SME market to beyond 20 per cent, Vikas Thapar, head of the business banking group at FAB told The National last month.

FAB, which currently controls about 15 per cent of total SME market share in the UAE, is looking to achieve the milestone by 2020. The combined book of FAB’s business banking group – primarily its SME business including assets and liabilities – grew a little more than 15 per cent in 2018 to Dh20bn and Mr Thapar expects it to grow by double digits this year as well.