FAB profit up 16% on investment gains

DH3.02B THIRD-QUARTER PROFIT PUTS NET PROFIT IN FIRST NINE MONTHS OF 2018 AT DH9.08B, UP 12% YEAR-ON-YEAR

First Abu Dhabi Bank (FAB) reported yesterday a 16 per cent jump in net profits for the third quarter of 2018 on the back of investment income gains and fall in impairment costs.

The bank’s profit reached Dh3.02 billion compared to Dh2.6 billion in the third quarter of 2017. This puts its net profit in the first nine months of 2018 at Dh9.08 billion, up 12 per cent year-on-year.

Profit for the quarter is above market expectations, with forecasts from SICO Bahrain pointing to Dh2.87 billion in net profit.

The rise in earnings came as FAB’s FX (foreign exchange) and investment income rose by 50 per cent in the third quarter of this year to Dh738 million, while impairment charges fell 23 per cent year-on-year during the quarter.

The drop in impairment costs came even as the ratio of non-performing loans to total loans inched up to 3.1 per cent at the end of September from 3 per cent last year.

Abdul Hamid Saeed, FAB’s group chief executive officer, said that going forward, the bank plans to “take advantage of growth opportunities abroad,” highlighting expansion plans in Saudi Arabia.

“In Saudi Arabia, we have completed our first debt capital markets transaction through our investment-banking franchise and we will be launching our commercial banking activities during the current quarter,” he said.

Saudi licence

FAB has already received a licence for commercial banking activities in Saudi Arabia earlier this year, as well as a licence for investment banking. This came amid a spike in interest in investing in Saudi Arabia among financial services firms as the kingdom prepares to see its main bourse index upgraded to Emerging Market status by the MSCI in June 2019.

“In addition, we continue to grow our personal and corporate banking offerings in Egypt. We are confident that our expansion plans will enhance our regional presence and provide an important contribution to the group and region for years to come,” FAB’s Saeed said.

Away from expansion plans, FAB’s balance-sheet saw gains in both loans and deposits. Net loans and advances reached Dh354 billion, up 8 per cent year-on-year, led by what FAB described as “sustained momentum in corporate and investment banking.”

Customer deposits also jumped by 20 per cent to Dh455 billion at the end of September, driven by “significant shortterm deposit inflows from the government.”

On the income statement, the bank’s total operating income went up 5 per cent to Dh4.8 billion from Dh4.6 billion in the same quarter last year. This put total income in the first nine months at Dh14.6 billion, up 1 per cent year-onyear. Meanwhile, FAB’s cost of risk also fell by 17 basis points year-on-year.

FAB was created through the merger of the National Bank of Abu Dhabi and First Gulf Bank, with the merger effective as of April 2017. The bank said yesterday integration for the merger is still underway, with systems integration to be completed by end 2018.

FAB’s operating income for the third quarter

FAB’s total income for first nine months of this year