FAB Headquarters
FAB Headquarters in Abu Dhabi. FAB, the UAE’s largest bank reported a net profit of Dh2.4 billion for the first three months of 2020, down 22 per cent from Dh3.1 billion in the same period in 2019. Image Credit: Supplied

Dubai: First Abu Dhabi Bank (FAB), the UAE’s largest bank reported a net profit of Dh2.4 billion for the first three months of 2020, down 22 per cent from Dh3.1 billion in the same period in 2019.

The bank attributed the decline in profit mainly to lower revenue due to rate cuts and unprecedented market conditions during the period, as well as the higher provisioning in light of a more challenging operating environment.

Operating income at Dh4.6 billion was 8 per cent lower in the first quarter 2020, year-on-year.

“Despite market headwinds, we have maintained a robust balance sheet and our capital, liquidity and funding position remain strong. This enables us to attract liquidity across our global network, underlining a flight to safety benefitting FAB in the current environment,” André Sayegh, Group Chief Executive Officer.

Balance Sheet

The bank said it focused on maintaining a robust balance sheet during the period, with strong liquidity and capital ratios, as well as healthy asset quality metrics, leveraging its inherent strength and scale to support customers and the wider community navigate unprecedented times due to the COVID-19 pandemic.

“FAB entered a period of unprecedented challenges for the global economy with an exceptionally strong balance sheet and capital position, enabling the bank to fully support customers and help to mitigate the wider economic impact by playing an integral role in the government’s targeted relief measures,” said Sheikh Tahnoon Bin Zayed Al Nahyan, Chairman of FAB.

“FAB has worked with the public and private sectors throughout in a spirit of partnership and collective responsibility, to support the economic prosperity of our nation and extend support where it is needed.”

FAB’s total assets surged 14 per cent year on year to Dh835 billion at the close of the first quarter. Loans and advances at Dh 382 billion was up 6 per cent year-on-year. Customer deposits at Dh497 billion was up 15 per cent with current account and savings account (CASA) balances at Dh181 billion, up 12 per cent year-on-year. The bank’s cost-to-income ratio (ex-integration costs) at 29.1 per cent, compared to 26.1 per cent in the first quarter of 2019.

Asset quality

Bank reported impairment charges at Dh738 million reflecting higher provisioning due to a challenging operating environment. At the close of the first quarter, the non-performing loan ratio at 3.5 per cent with provision coverage ratio at 95 per cent.

Liquidity and capital

At the close of the first quarter 2020, FAB reported strong liquidity and funding profile with a liquidity coverage ratio at 110 per cent. Bank’s common equity tier 1 (CET1) ratio at 12.1 per cent, in excess of regulatory requirements.