First Abu Dhabi Bank full year profit jumps 4% as operating income climbs

Net profit in 2019 rose to Dh12.5bn as operating income advanced 4% to Dh20bn

First Abu Dhabi Bank has issued a dual listed 1.4 billion Chinese yuan five-year formosa bond. Reem Mohammed / The National

First Abu Dhabi Bank, the UAE’s largest lender by assets, reported a  4 per cent jump in full-year profit due to higher operating income.

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Full year net profit for the period ending December 31, 2019 climbed to Dh12.5 billion, the lender said in a statement to Abu Dhabi Securities Exchange, where its shares trade.

Operating income for the reporting period rose 4 per cent Dh20.2bn with a near doubling of a return on investments and derivatives. Loans and advances increased 16 per cent to Dh408bn while customer deposits rose 12 per cent to Dh519bn.

Last year "marked another year of growth for FAB, despite challenging market conditions regionally and internationally," Sheikh Tahnoon Bin Zayed Al Nahyan, chairman of FAB said. "We are starting off 2020 with a robust capital position, enabling us to support our future growth plans in the UAE and across strategic markets.”

FAB’s board has recommended to distribute a cash dividend of 74 fils per share, implying total cash dividends of Dh8.08bn for 2019.

The bank's performance in 2019 was driven by "the solid underlying performance" of its core businesses despite challenging operating conditions and a reduction in interest rates in the second half of the year, said Abdulhamid Saeed, the lender's group chief executive.

“Investments in key strategic and digital initiatives enabled us to enhance customer experience, support business productivity, and position the group for future growth and ongoing agility," Mr Saeed said. “Looking ahead, we remain firmly committed to maximising shareholder returns, and supporting our employees, customers and the communities we operate within as we grow stronger, together.”

Net impairment charges for the period increased 7 per cent year-on-year to Dh1.84bn. General, administration and other operating expenses rose 3.19 per cent to Dh5.49bn.

In the fourth quarter, the lender’s net profit jumped 5 per cent year-on-year to Dh3.08bn and operating income rose 6 per cent year-on-year to Dh5.08bn.

Total assets by the end of December climbed to Dh822bn, compared to Dh744bn during the same period in the previous year.

FAB is also in discussions with Lebanon's Bank Audi to acquire its fully-owned subsidiary in Egypt. The Lebanese lender's Egyptian unit has total assets of $4.4bn (Dh16.1bn) and would allow FAB to boost growth in different markets, it said last week. The lender is currently expanding its presence in Saudi Arabia and opened its third branch in Jeddah recently.

Lebanese banks need to meet and increase in capital requirements requested by the Central Bank of Lebanon amid the worst economic crisis to hit the country since the end of a 15-year civil war in 1990, which may prompt the country to seek a bail out package from the International Monetary Fund. In November the central bank instructed Lebanese banks to raise their common equity Tier 1 capital, an indicator of a lender's financial strength, by 10 per cent at the end of December 2019 and another 10 per cent by the end of June this year.