First Abu Dhabi Bank profit jumps on investment gains

The UAE's largest lender by assets reports $784m in net income in the second quarter

First Abu Dhabi Bank's non-interest income rose 54 per cent year-on-year to Dh2.39bn. Chris Whiteoak / The National

First Abu Dhabi Bank, the UAE’s largest lender by assets, reported a 19 per cent increase in second-quarter profit due to gains on investments, growth in non-interest income and falling impairment charges as the Arab world's second-largest economy continues to recover from the Covid-19 pandemic.

Total net profit attributable to shareholders for the three-month period ending June 30 climbed to Dh2.9 billion ($784 million), the lender said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

The net gain on investments and derivatives soared to Dh1.4bn in the second quarter, from Dh200m in the same period a year ago. Non-interest income rose by 54 per cent year-on-year to Dh2.39bn while impairment charges fell by 36 per cent to Dh677m.

“Demonstrating the unique strength of our diversified franchise, we have achieved solid growth across our core businesses,” said Hana Al Rostamani, group chief executive of FAB.

"In corporate and investment banking, we continued to support and partner with our clients in navigating the gradual economic recovery and focused on driving specialisation in key areas, particularly investment banking, leading to a double-digit growth in revenue.”

The UAE’s economy continues to recover from the pandemic and is expected to expand by 2.4 per cent in 2021 on the back of an accelerated vaccination programme and fiscal stimulus and monetary measures, according to the UAE Central Bank.

The non-oil economy is expected to grow about 4 per cent this year and next while overall economic growth is expected to be 3.8 per cent in 2022, the banking regulator said last month.

FAB’s total customer deposits in the second quarter grew by 11 per cent annually to Dh575bn while loans and advances rose by 4 per cent to Dh399bn. Total assets increased by 9 per cent to Dh944bn.

Profit after tax in the first half of the year rose by 11 per cent to Dh5.3bn from the same period a year ago. Impairment charges in the first half dropped 36 per cent to Dh1.14bn while non-interest income increased by 35 per cent to Dh4.09bn, the bank said. Net gain on investments and derivatives in the first six months rose more than 8 times to Dh1.75bn.

“While our liquidity profile remains strong, we continue to deploy our balance sheet profitably to enhance group returns, with ample capacity to support our client franchise through the economic recovery,” James Burdett, group chief financial officer of FAB, said.

Looking ahead, Ms Al Rostamani said “while uncertainties remain, we are confident that our distinct competitive strengths, proven agility and innovative spirit position us well to unlock opportunities for our clients, people, communities and all our stakeholders across the global markets we operate in”.