Dubai: First Abu Dhabi Bank (FAB), which reported a 5 per cent increase in net profit for the second quarter of 2019 from a year ago, has proposed to scrap its foreign ownership limit. The board of directors discussed removing the limit, saying it would be part of efforts “to support the UAE in attracting capital, foreign investments, and in promoting economic growth”.
The proposed change would still be subject to regulatory authorities, and it would require changes to the current laws and policies. This comes just two weeks after the UAE Cabinet approved allowing 100 per cent foreign ownership in certain sectors. Banking was not one of those industries, though.
FAB in April had raised its foreign ownership limit to 40 per cent from 25 per cent. The discussion around ownership limits came as the bank also announced its profits for the second quarter, which reached Dh3.22 billion — in line with market expectations, with EFG Hermes having forecast Dh3.2 billion. The figure brings profits in the first-half to Dh6.3 billion — up 4 per cent year-on-year.
Getting over market challenges
The growth in earnings came amid what FAB described as “challenging market conditions”, and ahead of an expected slowdown in global economic growth.
“Looking ahead and despite a softer global outlook, we are confident in our ability to continue to leverage our leading franchise, diversified business model, and strong execution capabilities to deliver sustainable growth and maximise shareholder returns,” said Abdul Hamid Saeed, group CEO.
During the second quarter, the bank saw a 9 per cent increase in non-interest income, which reached Dh1.85 billion. This helped boost revenues, rising by 5 per cent year-on-year to Dh5.15 billion. Revenues for the first six months totalled Dh10 billion — up 3 per cent.
Despite the increase in profits, FAB’s performance still lags behind its Dubai peers. On Wednesday, three Dubai-based banks reported double-digit increases in net profit for the first-half.
Dubai Islamic Bank saw profits jump 13 per cent, while Emirates NBD and Emirates Islamic saw gains of 49 per cent and 39 per cent, respectively. For FAB, loans and advances at the end of June grew 6 per cent to Dh366 billion, as customer deposits went up by 7 per cent year-on-year to Dh462 billion.
Impairment charges rose higher in the quarter, by 10 per cent. But that only caused a 1 per cent increase for the entire first-half. FAB’s Saeed said the bank has developed new solutions for both its retail customers and corporate and investment banking clients, and that it plans to continue to “drive economic growth and diversification”.