FAB’s first quarter profit slides but balance sheet remains strong

Total assets were up 14% from last year as loans and advances rose 6%

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, reported a slide in first quarter net profit as it took "prudent" provisions amid challenging market conditions, but said its balance sheet remained strong.

The bank’s net profit in the first three months of 2020 was down 22 per cent to Dh2.4 billion due to higher provisioning while operating income fell 8 per cent year-on-year to Dh4.6bn, FAB said in a statement on Monday.

Total assets, valued at Dh835bn, were up 14 per cent from last year while loans and advances rose 6 per cent during the first quarter to Dh382bn.

“FAB delivered a resilient performance in the first quarter of 2020 in an unprecedented and challenging market environment,” André Sayegh, group chief executive of FAB, said.

“Despite market headwinds, we have maintained a robust balance sheet and our capital, liquidity and funding position remain strong. This enables us to attract liquidity across our global network, underlining a flight to safety benefitting FAB in the current environment. In addition to being a major supporter to the private sector in the UAE, we continue to work closely with the UAE government and other public sector entities in the financial domain to support the economy in all respects.”

FAB pointed to a liquidity coverage ratio of at 110 per cent at the end of the quarter as a sign of its asset strength.

Customer deposits rose 15 per cent to Dh497bn with current and savings account balances increasing by 12 per cent to Dh181bn.

FAB, formed through the merger of National Bank of Abu Dhabi and First Gulf Bank in 2017, is at the forefront of Abu Dhabi’s economic development efforts.

It is one of three major banks in the capital facilitating an SME credit guarantee scheme where the Abu Dhabi government is guaranteeing up to 80 per cent of loans extended to small and medium-sized enterprises. It is also extending help to individuals and business affected by Covid-19 through loan deferrals, as well as reductions on various charges and fees.

The bank's own response to the pandemic was also swift, with a business continuity plan put in place in a "prompt and timely manner", Mr Al Sayegh said.

"I am proud to say that our staff adapted very quickly to a new operating environment, which enabled us to deliver uninterrupted banking services to our customers and stakeholders," he added.