The Abu Dhabi-based lender FGB said its first quarter net profit increased nearly 7 per cent, missing analyst estimates and ceding its top spot as the country’s most profitable lender to Emirates NBD of Dubai.
Net income rose to Dh1.42 billion in the first three months of the year from Dh1.33bn in the same period last year as the bank bolstered its efforts to raise money from selling products that generate handsome fees such as credit cards. That strategy is being adopted by most banks here, making competition more heated.
"It is true that competition in the banking sector remains intense, however, that is exactly what gives FGB more drive to innovate and deliver a stronger performance quarter after quarter," said Andre Sayegh, the chief executive.
“We are leveraging on enhanced product and service capabilities to serve our customers better while optimising cross-sell and synergies within the FGB group, in the domestic as well as overseas market.”
FGB earned profits of Dh5.6bn last year, a touch ahead of National Bank of Abu Dhabi at a little over Dh5.5bn and Emirates NBD at just over Dh5bn.
Analysts said FGB reached the top largely by lowering its costs, putting less of a premium on its branch network and more on developing relationships and making its sales force more effective. It has also realised that it cannot survive on loans alone and has consequently beefed up its fee income business from underwriting bonds and securities, displacing HSBC to become the nation’s leading arranger of syndicated loans.
Elsewhere, Sharjah-based United Arab Bank said its first quarter income was unchanged at Dh161 million from last year.
This year will be tougher for banks, analysts say, because the UAE will earn less revenue from oil, which lost half of its value last year, putting pressure on overall economic growth.
“I am not as upbeat as last year,” said Taher Safieddine, an analyst at the Dubai-based investment bank Shuaa Capital. “It’s definitely tougher because the economic uncertainty is higher, but up until now we haven’t seen any cracks in the wall.” Five analysts polled by Reuters expected an average Dh1.51bn first quarter profit for FGB.
mkassem@thenational.ae
