Dubai: First Abu Dhabi Bank (FAB), the UAE’s largest bank by assets, on Monday reported a net profit of Dh3.1billion for the first quarter of 2019, up 6 per cent compared to the previous quarter and 4 per cent year on year.
Operating income for the period grew 3 per cent to Dh4.9 billion quarter-on-quarter and 1 per cent year-on-year. Operating expenses, at Dh1.3 billion, were down 3 per cent sequentially and 1 per cent year on reflecting cost discipline and synergy realisation since the legal merger of National Bank of Abu Dhabi and First Gulf Bank in the first quarter of 2018.
“Our performance during the first three months of 2019 has created a robust foundation for sustained growth momentum and we remain optimistic about the remainder of the year,” said Abdul Hamid Saeed, Group Chief Executive Officer of FAB.
The bank’s net interest income for the first quarter of this year was down 5 per cent quarter on quarter and year on year resulting in a 5 basis point decline in net interest margins (NIMs) to 2.16 per cent compared to 2.21 per cent in the fourth quarter of 2018. NIMs were down 33 basis points year on year.
Non-interest incomes, particularly, forex and investment income rose 21 per cent quarter on quarter and 49 per cent year on year, respectively to Dh971 million.
FAB’s total assets at Dh733 billion were up 8 per cent year-on-year compared to Dh678 billion reported in the same quarter last year. Total loans and advances grew at healthy 6 per cent year on year to Dh359 billion in the first quarter as customer deposits surged 7 per cent year on year to Dh433 billion.
“Our successful integration and solid fundamentals have enabled us to improve our profitability, while continuing to prudently manage risk across our portfolios. As we move into the second quarter, the bank will continue to leverage its competitive advantages,” said Saeed.
The bank has reported significant cost savings with the cost-to-income ratio (ex-integration costs) at 26.1 per cent. Asset quality remains strong as healthy asset quality metrics with non-performing loan ratio at 3.3 per cent and adequate provision coverage at 106 per cent. Cost of risk edged up by 12 bps quarter on quarter.
At the close of the first quarter, FAB maintained strong liquidity position with liquidity coverage ratio at 117 per cent. The bank continued to maintain strong capital position following a record dividend payout, with fully phased-in Basel III common equity tier-1 (CET1) ratio and total capital adequacy ratio (CAR) improving to 12.7 per cent and 16 per cent respectively.
FAB recently increased its ownership limit of foreign shareholders to 40 per cent. “Increasing our foreign ownership limit to 40 per cent, which was approved by shareholders in February and implemented this month, was a notable milestone supporting higher liquidity on our shares and attracting further international investment,” said Saeed.