FAB’s first-quarter income more than doubles on sale of stake in payments business Magnati
First Abu Dhabi Bank’s first-quarter net profit more than doubled to hit a record high, driven by the sale of its stake in payments business Magnati and the improved performance of its core business.
Net profit attributable to shareholders for the three months to the end of March surged to Dh5.1 billion ($1.4bn), the lender said on Thursday in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.
FAB’s quarterly income includes a Dh2.8bn net gain from the sale of a majority stake in Magnati to New York-listed Brookfield Business Partners. The sale, which was announced in February, valued Magnati at about $1.15bn.
The first-quarter earnings beat Arqaam Capital’s net profit forecast of Dh3.05bn and EFG Hermes’ estimate of Dh3.1bn.
Core underlying operational performance also boosted the bank’s profitability, which was supported by higher net interest income, an increase in fees and commissions, as well Bank Audi Egypt’s bigger contribution to the group’s revenue, which helped to offset lower trading and investment income during the reporting period.
The sale of the Magnati stake realises “significant value for our payments business, paving the way for accelerated growth with a long-term strategic partner as we remain at the forefront of the region’s payments and digital agenda”, said Hana Al Rostamani, FAB group chief executive.
“Our core businesses performed well during a period of sustained buoyant economic activity in the UAE, capitalising on a healthy pipeline and growing business and consumer confidence.”
FAB’s total income jumped 66 per cent annually to Dh7.26bn while operating income for the reporting period climbed 2 per cent to Dh4.5bn.
It recorded a 9 per cent rise in operating income on an underlying basis, excluding Magnati-related and real estate gains during the first quarter.
Impairment charges for loan losses dropped to Dh457 million at the end of March, from Dh470m in the same period last year, as the UAE economy continued to recover.
The bank’s non-performing loans and its provision cover ratios came in at 3.8 per cent and 98 per cent, respectively.
The UAE economy made a strong bounce-back from the pandemic-driven slowdown last year and has continued to grow this year despite geopolitical headwinds and pandemic-related uncertainty.
The Arab world’s second-largest economy introduced fiscal and monetary stimulus measures worth Dh388bn, including the Dh50bn Targeted Economic Support Scheme.
“Looking ahead and despite ongoing global uncertainty, we see significant momentum in the UAE, which FAB is very well positioned to support and capitalise on,” Ms Al Rostamani said.
FAB’s assets rose by 4 per cent a year to Dh981bn, down from Dh1 trillion at the end of December last year.
Customer deposits increased by 6 per cent to Dh600bn. Loans, advances and Islamic financing increased 15 per cent annually to Dh434bn.
Operating expenses during the reporting period climbed 15 per cent a year to Dh1.5bn on the back of investments in digital and strategic initiatives, and the continued inclusion of Bank Audi Egypt in the FAB group, the UAE’s largest lender by assets.
The bank is optimistic about medium to high single-digit growth this year, supported by the UAE’s economic rebound and higher oil prices, although the Ukraine conflict is a concern, chief financial officer James Burdett said in February.
The lender, which opened a representative office in Iraq in March as part of its geographical expansion, withdrew its non-binding offer to acquire a majority stake in Egypt’s largest investment bank EFG Hermes.
It cited continued “global market uncertainty and volatile macroeconomic conditions” as the reasons for it withdrawing its bid, it said at the time.
“Internationally, we continued to expand our presence into new, targeted markets. Egypt remains a strategically important market for the [FAB] group, and the integration of Bank Audi Egypt is on track for completion within the next few months,” Ms Al Rostamani said.